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EOFY for property investors

June 5, 2023

As the end of the financial year fast approaches, here are three main factors to keep in mind. By being prepared, particularly with your admin, having an awareness of what you can claim and considering any capital losses or gains, you will be well-positioned to make the most of EOFY.

Compile your records and receipts

This time of year either has us patting ourselves on the back for our good record keeping throughout the last 12 months, or vowing to have better systems in place next financial year. If it’s the latter, there are many great apps you can utilise to make it easier to keep track.

In the ATO app, there is a myDeductions section to help keep your records in one place, and Expensify and Shoeboxed are also popular choices. These apps are free, though the latter two have paid plans that allow for more features (including the ability to integrate with accounting software such as QuickBooks).

Whichever system you have used, get prepared by compiling your records and receipts or looking at your app. Having this information at the ready will reduce the time it will take to prepare your tax return and ensure you don’t miss any expenses from the past year.

Know what to claim

Whether you’re new to property investment or have owned an investment property for a while, it’s always a good idea to be aware of what you can claim come tax time. This can be a bit of a process, given the introduction of different tax deduction rules, but here are some key things to focus on.

Immediate expenses

As a property investor, you can claim expenses such as council rates, body corporate fees and charges, loan expenses such as interest paid and bank fees, as well as costs related to advertising, accounting, and alterations. Costs relates to the investment property’s repairs and maintenance, such as cleaning, gardening, or pest control, can also be claimed.

You can also claim expenses that relate to the running of the property, such as phone calls to the tenants or real estate agents and internet charges. However, these must be portioned according to how often they were used for this purpose, rather than personal use – again, this is why good record keeping throughout the year is helpful in saving time at EOFY.

Depreciation

According to research from BMT, up to 80% of property investors fail to take full advantage of claiming tax depreciation.i

Property depreciation is the second-highest deduction available for property investors, second to mortgage interest repayments, so not claiming as much as you can is a lost opportunity.

Depreciation is the annual decline in the value of the property’s structure and permanent fixtures such as the oven/stove, dishwasher, carpet, heater, and air-conditioning unit. You can claim interest for all qualifying depreciating items on investment properties purchased from 9 May 2017 onwards.

You can also claim a depreciation deduction on the construction costs of 2.5% a year for a period of 40 years – this is if your investment property was built after 16 September 1987. The same applies to renovations done after 27 February 1992. The depreciation deductions of the property structure and permanent fixtures can be complex, so it can be best to seek advice.

It’s important to note that if the property was used for personal use (such as your holiday home), interest payments cannot be claimed as an expense for this period.

Consider negative gearing losses and capital gains

Negative gearing, in which the income from the investment is less than the expenses are, is also something to keep in mind at EOFY. If you have had losses, this will reduce your total tax payable.

On the other hand, if you’ve sold your investment property and made a capital gain on the sale this financial year, this will be taxed. Provided you have owned your investment property for over 12 months, you can apply for the 50% capital gains tax (CGT) discount.

As you prepare for June 30, if you would like to review your current finance arrangement please don’t hesitate to get in touch.


Suite 2, 1 Railway Crescent
Croydon, Victoria 3136

Email: integrityone@iplan.com.au

Telephone: 03 9723 0522

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This information is of a general nature and does not take into consideration anyone’s individual circumstances or objectives. Financial Planning activities only are provided by Integrity One Planning Services Pty Ltd as a Corporate Authorised Representative No. 315000 of Integrity Financial Planners Pty Ltd ABN 71 069 537 855 AFSL 225051. Integrity One Planning Services Pty Ltd and Integrity One Accounting and Business Advisory Services Pty Ltd are not liable for any financial loss resulting from decisions made based on this information. Please consult your adviser, finance specialist, broker, and/or accountant before making decisions using this information.

Filed Under: Blogs, News

Market movements & economic review – June 2023

June 5, 2023

Concerns leading up to the RBA’s decision on interest rates this month, along with the drama over the US debt ceiling, have affected local markets and the Australian dollar.

The ASX200 ended the month nearly 3% down thanks also to weaker commodity prices.

Click here for our June update video.

Please get in touch on 03 9723 0522 if you’d like assistance with your personal financial situation.


Suite 2, 1 Railway Crescent
Croydon, Victoria 3136

Email: integrityone@iplan.com.au

Telephone : 03 9723 0522

Integrity One Facebook

This information is of a general nature and does not take into consideration anyone’s individual circumstances or objectives. Financial Planning activities only are provided by Integrity One Planning Services Pty Ltd as a Corporate Authorised Representative No. 315000 of Integrity Financial Planners Pty Ltd ABN 71 069 537 855 AFSL 225051. Integrity One Planning Services Pty Ltd and Integrity One Accounting and Business Advisory Services Pty Ltd are not liable for any financial loss resulting from decisions made based on this information. Please consult your adviser, finance specialist, broker, and/or accountant before making decisions using this information.

Filed Under: Blogs, News

Quarterly property update – June 2023

June 5, 2023

Has Australia’s housing downturn come to an end?

Interest rates have been the hot topic of conversation among homebuyers for a year now. In May 2022 the RBA made its first tactical move, raising the official rate for the first time since November 2010. And it’s all we’ve seemed to hear about since – with much speculation as to whether the RBA will increase rates or hit “pause”.

As a result of rate increases, home values slipped across the country for the best part of 2022, only beginning to rebound modestly in recent months. Some industry experts believe the worst of the rates hikes could be behind us, while others are taking a ‘wait and see’ approach. In any case the property market appears to be reacting with optimism, with June’s CoreLogic Home Value Index showing the strongest monthly growth since November 2021.

Capital city uplift

Figures released by CoreLogic at the start of June showed the third monthly rise in national housing values with each of the four largest capitals recording a lift over the quarter. After falling -9.1% between May 2022 and February 2023, have Australian housing values finally bottomed out? “Our anticipation is the market will continue to level out on the expectation that interest rates have peaked and the imbalance between housing demand and supply will persist for some time yet,” Mr Lawless wrote in the May Home Value Index (HVI), citing the significant lift in overseas migration will likely put further strain on availability.

Eleanor Creagh, senior economic at PropTrack, said interest rates cannot solely be held responsible for market sentiment. “This stabilisation in the housing market has occurred despite further rate rises. It appears the impact of interest rate rises is being counterbalanced by stronger housing demand and tight supply conditions,” she said in response to the May rate rise. “The surprise increase in interest rates is unlikely to outweigh these factors, though may dampen confidence in the nascent recovery and in the near-term impact the pace of monthly price increases.”

Ultimately, housing prices are on a knife’s edge while larger economic factors continue to fluctuate. “The path for home prices in the months ahead will be influenced by many factors, including the strength in housing demand, the level of supply hitting the market, as well as the trajectory of interest rates,” Ms Creagh added.

Dwelling values over the quarter

CoreLogic’s national HVI increased by 1.2% in May, following a 0.5% lift in April to be 2.3% higher over the quarter. The combined capital values have improved by 2.8% over the past three months while the combined regions improved by 0.8% during the same time period.

All signs are pointing to the fact the housing market has moved through an inflection point according to Mr Lawless. “Not only are we seeing housing values stabilising or rising across most areas of the country, a number of other indicators are confirming the positive shift. Auction clearance rates are holding slightly above the long run average, sentiment has lifted, and home sales are trending around the previous five-year average,” said Mr Lawless.

Sydney

Sydney is by far leading the positive turn in housing conditions, albeit coming from the deepest price slump. While the median dwelling value in the Harbour City is up 4.5% for the quarter, it’s still -13.8% down since its January 2022 Peak – the greatest peak to trough change in the country. Investors could take note that Sydney’s current gross rental yield sits at 3.2%.

Melbourne

Home to the mildest pandemic cycle in the country, the heavily locked down city experienced a 10.7% increase during that time. After the Victorian capital’s housing values peaked in February 2022, the market fell -9.6% to hit its trough by February this year. Now in recovery, Melbourne values have crept up 1.6% this quarter. In Melbourne, the gross rental yield is currently 3.5%.

Brisbane

After going through one of the most impressive Covid booms in the country as values soared an incredible 41.8%, Brisbane’s peak arrived in June 2022. The bottom of the local market came in February this year with a -11% cyclical fall, but values have since corrected, recording an increase of 1.8% over the quarter. For the Queensland capital, gross rental yields are sitting at 4.3%.

Canberra

Home values skyrocketed 38.8% during the post-pandemic run with a peak arriving in Canberra by June last year. The city has since seen values come off -9.5%, recording -0.1% this quarter and is now in its “cyclical trough” accord to CoreLogic data. Australia’s capital has a current gross rental yield of 4.1%.

Perth

The West Australian capital saw dwelling values jump by 24.5% during the recent boom. The peak to trough (July 2022 to February 2023) fall in Perth was only mild with a -0.9% change and since then values are already up by 2.4% in the last quarter. Home to the second highest rental yield in the country (only behind Darwin’s at 6.4%), Perth’s is sitting at 4.9%.

Note: all figures in the city snapshots are sourced from: Core Logic’s national Home Value Index (June 2023)

If you have any questions or need any information please give us a call on 039723 0522.

Nicholas Berry Credit Representative Number 472439 is a Credit Representative of Integrity Finance (Aust) Pty Ltd – Australian Credit Licence 392184.
This information is of a general nature and does not take into consideration anyone’s individual circumstances or objectives. Financial Planning activities only are provided by Integrity One Planning Services Pty Ltd as a Corporate Authorised Representative No. 315000 of Integrity Financial Planners Pty Ltd ABN 71 069 537 855 AFSL 225051. Integrity One Planning Services Pty Ltd and Integrity One Accounting and Business Advisory Services Pty Ltd are not liable for any financial loss resulting from decisions made based on this information. Please consult your adviser, finance specialist, broker, and/or accountant before making decisions using this information.

Filed Under: Blogs, News

Market movements & economic review – May 2023

May 29, 2023

In the lead up to the Federal Budget, better-than-expected inflation figures were cause for optimism that the lengthy run of cash rate hikes have had an impact.

US stocks in April saw the biggest rally that has been experienced for months, as investors looked beyond gloomy economic data.

Local markets were buoyed by the Wall Street rally, as well as welcome signs of inflation easing, with the ASX200 ending the month slightly higher.

Click here for our May update video.

Please get in touch on 03 9723 0522 if you’d like assistance with your personal financial situation.


Suite 2, 1 Railway Crescent
Croydon, Victoria 3136

Email: integrityone@iplan.com.au

Telephone : 03 9723 0522

Integrity One Facebook

This information is of a general nature and does not take into consideration anyone’s individual circumstances or objectives. Financial Planning activities only are provided by Integrity One Planning Services Pty Ltd as a Corporate Authorised Representative No. 315000 of Integrity Financial Planners Pty Ltd ABN 71 069 537 855 AFSL 225051. Integrity One Planning Services Pty Ltd and Integrity One Accounting and Business Advisory Services Pty Ltd are not liable for any financial loss resulting from decisions made based on this information. Please consult your adviser, finance specialist, broker, and/or accountant before making decisions using this information.

Filed Under: Blogs, News

2023-24 Federal Budget Analysis

May 10, 2023

A surplus for now but stormy seas ahead

Treasurer Jim Chalmers bills his 2023 Federal Budget as an economic strategy to help ease cost-of-living pressures.

To that end, he has delivered a modest but welcome package of cuts to healthcare, housing and energy costs as well as boosts to welfare payments for single parents and the unemployed.

Banking an unexpected bonus in increased tax revenue and rising commodity prices, the Albanese government has aimed to help the most disadvantaged while also looking ahead with new plans for renewable energy, defence and the arts.

But it has kept its spending under control to deliver a forecast $4.2 billion budget surplus – the first in 15 years.

The Treasurer sums up his second budget as “a plan for security, for prosperity, for growth”.

The big picture

While the first budget surplus in a decade and a half is to be celebrated, the joy will be short-lived. By next year’s budget, it’s expected there will be a return to small deficits for the next few years.

That’s because the global economy is slowing thanks to persistent inflation and higher interest rates. Aside from the pandemic and the 2007 Global Financial Crisis, the next two years are expected to be the weakest for global growth in more than two decades.

As a result, the government expects Australia’s economic growth to slow from 3.25% in 2022-23 to just 1.5% the following year, before recovering a little to 2.25%.

In this environment, the treasurer continues to mark inflation as the government’s primary economic challenge. He says that is why the budget is “calibrated to alleviate inflationary pressures, not add to them”.

The good news is that the Reserve Bank says inflation is falling slightly faster than it had first forecast and has now passed its peak. It is expected to be around 4.5% by the end of the year, a long way from last year’s CPI rate of 7.8%.

Easing the cost of living

The government’s $14.6 billion package of cost cuts aimed at helping some of those most affected by rising costs covers energy bills, health and medical services, and welfare payments.

There will be energy bill relief to around five million households and one million small businesses. From July 2023, eligible households will receive up to $500 and eligible small businesses up to $650.

The government will also introduce a number of energy saving programs for households including low-interest loans and funds for upgrades to social housing. And there will be access to better information on reducing energy bills.

Health and medical

Countering a major expense for many, the government is pouring in billions of dollars to ease health and medical costs and access to services.

It will spend an extra $3.5 billion to provide incentives to doctors to bulk bill Concession Card holders and children under 16. It’s expected that the increased bulk billing incentive will help around 11.6 million people.

The cost of medicines is also likely to change for many who suffer chronic health conditions. From 1 September 2023, some patients will be eligible to be prescribed two months’ worth of medicine at a time, instead of one month’s worth. It’s expected this change will cut the number of visits to GPs and pharmacies, and the government estimates at least six million people will see their bills for medicines reduced by half.

The government is also providing $2.2 billion over five years for new and amended listings to the PBS, including treatment for cystic fibrosis.

Meanwhile, to improve access to care and reduce the strain on hospitals, a further $358.5 million will be spent to open a further eight Urgent Care Clinics. The clinics will bulk bill and remain open for longer hours.

Welfare boost

Income support payments including JobSeeker, Austudy and Youth Allowance will rise by $40 a fortnight following a concerted campaign by lobby groups in the months leading up to the budget.

And, recognising the extra challenges faced by older people looking for work, those aged 55 and over and out of work for at least nine continuous months, will now receive the higher rate JobSeeker payment currently paid to those over 60. Around 52,000 people will receive the increase of $92.10 a fortnight.

There will be more support for eligible single parents from September 2023. They will receive the Parenting Payment until their youngest child turns 14 (currently up to eight years old). Those receiving the payment will also benefit from more generous earning arrangements compared to JobSeeker. Eligible single parents with one child will be able to earn an extra $569.10 per fortnight, plus an extra $24.60 per additional child, before their payment stops.

Housing assistance

While rents continue to climb sharply around the country, the government has provided only limited assistance to renters. Those receiving Commonwealth Rent Assistance will see a 15% increase in their payments from 20 September 2023.

Eligibility for the Home Guarantee Scheme will be expanded beyond first home buyers to include any 2 eligible borrowers beyond married and de facto couples, and non-first home buyers who have not owned a property in Australia in the preceding 10 years.

The government’s other housing initiatives are medium to long term solutions to the housing crisis.

There are new tax incentives to encourage the construction of more build-to-rent developments. The government claims an extra 150,000 rental properties could be delivered as a result in ten years.

The government is also focusing on providing more affordable housing by supporting more lending to community housing providers for social and affordable housing projects.

Pay rise for aged care workers

Severe staff shortages in the aged care sector, largely been driven by low wages, may abate a little with the government’s commitment to fund a pay rise.

More than $11 billion has been allocated to support an interim 15 per cent increase in award wages.

Support for families

Childcare will be cheaper from July 10, when the government subsidy will increase to 90% for families with a combined income of $80,000 or less.

For families earning over $80,000, the subsidy rate will taper down by 1 percentage point for every additional $5,000 of family income until the subsidy reaches 0% for families earning $530,000.

A more flexible and generous Paid Parental Leave scheme will also be introduced in July. A new family income test of $350,000 per annum will see nearly 3,000 additional parents become eligible for the entitlement each year.

Superannuation

Superannuation is in the government’s sights and employers and individuals with larger balances will be affected.

The concessional tax for those with balances exceeding $3 million will increase from 1 July 2025 to 30%. Earnings on balances below $3 million will continue to be taxed at the concessional rate of 15%.

Meanwhile, from 1 July 2026, employers will have to pay their employees’ super at the same time they pay their wages. The government says that in 2019-20, employers failed to pay $3.4 billion of super owing to their employees.

Looking ahead

The stormy global economic outlook will keep Australia on its toes for the next two years or so but the government has attempted both to support those who are particularly vulnerable now and keep an eye to the future with some bigger thinking.

Moving forward, the government wants to position Australia a “renewable energy superpower” with a new Net Zero Authority to help attract new clean energy industries and help workers in coal regions to find new jobs.

The arts received a boost with almost $1 billion going to art galleries, museums, arts organisations and the film sector to help address “a decade of chronic underfunding”.

And there is the much debated investment in defence – more than $30 billion over the next ten years. Treasurer Chalmers says that while we may have a lot “coming at us – we have a lot going for us too”.

Information in this article has been sourced from the Budget Speech 2023-24 and Federal Budget Support documents.

It is important to note that the policies outlined in this publication are yet to be passed as legislation and therefore may be subject to change.

If you have any questions about how any of these proposed changes may impact your personal financial situation please get in touch on 03 9723 0522. 


Suite 2, 1 Railway Crescent
Croydon, Victoria 3136

Email: integrityone@iplan.com.au

Telephone : 03 9723 0522

Integrity One Facebook

This information is of a general nature and does not take into consideration anyone’s individual circumstances or objectives. Financial Planning activities only are provided by Integrity One Planning Services Pty Ltd as a Corporate Authorised Representative No. 315000 of Integrity Financial Planners Pty Ltd ABN 71 069 537 855 AFSL 225051. Integrity One Planning Services Pty Ltd and Integrity One Accounting and Business Advisory Services Pty Ltd are not liable for any financial loss resulting from decisions made based on this information. Please consult your adviser, finance specialist, broker, and/or accountant before making decisions using this information.

Filed Under: Blogs, News

Market movements & economic review – April 2023

April 17, 2023

Stay up to date with what’s happened in the Australian economy and markets over the past month.

March was marked by banking failures in the US that sent ripples through global sharemarkets.

However, the first quarter of 2023 ended on a note of optimism in Australia due to better-than-expected inflation figures and expectations of a tempering in rate rises.

Click here for our April update video.

Please get in touch on 03 9723 0522 if you’d like assistance with your personal financial situation.


Suite 2, 1 Railway Crescent
Croydon, Victoria 3136

Email: integrityone@iplan.com.au

Telephone : 03 9723 0522

Integrity One Facebook

This information is of a general nature and does not take into consideration anyone’s individual circumstances or objectives. Financial Planning activities only are provided by Integrity One Planning Services Pty Ltd as a Corporate Authorised Representative No. 315000 of Integrity Financial Planners Pty Ltd ABN 71 069 537 855 AFSL 225051. Integrity One Planning Services Pty Ltd and Integrity One Accounting and Business Advisory Services Pty Ltd are not liable for any financial loss resulting from decisions made based on this information. Please consult your adviser, finance specialist, broker, and/or accountant before making decisions using this information.

Filed Under: Blogs, News

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Integrity One Planning Services Pty Ltd (ABN 59 125 846 933) is a Corporate Representative (315000) of Integrity Financial Planners Pty Ltd (AFSL No. 225051).