in appreciation of depreciation

In appreciation of depreciation

Simply put, depreciation is the act of a fixed asset losing value over time. It occurs in all acquired entities.

The nature of this ongoing prospect in terms of an investment property precludes depreciation solely for end-of-financial year prioritising.

Rather, a concerted financial planning approach and effort ensures that your investment and deprecation remain a cohesive unit.   

Fast facts

—Depreciation is not a tax-time issue – organise a depreciation schedule as soon as an investment property settles to gain immediate tax deductions.

—Use a depreciation schedule as a tool for calculating future costs and minimising them.

—Items valued below $300 can be written off immediately, while assets that have an opening value below $1,000 in the year of acquisition can be added to a low-value pool.

The art of anticipation 

Industry leaders, such as the Executive Chairman of Raine & Horne, Angus Raine, offer sound depreciation advice: “As soon as you settle on a property that you plan to use for investment purposes, seek out the advice of a depreciation specialist such as a quantity surveyor, who can use their knowledge of depreciation legislation to maximise deductions for partial-year periods as well.”

Mr Raine adds that the depreciation potential of a property is often a factor in an investor’s decision to acquire a rental property.

“A depreciation estimate obtained prior to purchase can help investors when budgeting for their new investment. This is because the deductions for wear and tear can assist with minimising the costs involved in owning an investment property,” Mr Raine says.

Act fast to capitalise on potential

Quantity surveying firm BMT Tax Depreciation suggests that investors take swift action.  According to BMT’s research, even if an investment property is owned for just 20 days, an investor could potentially claim around $3,834 in deductions in the first financial year alone.

The Chief Executive Officer of BMT, Bradley Beer, says deprecation specialists will utilise the latest methods of calculating the wear and tear on a property, regardless of how long it’s been owned and rented.

“A comprehensive depreciation schedule will incorporate methods such as immediate write-off and low-value pooling to maximise deductions for a shorter period of ownership,” says Mr Beer.

“By requesting a depreciation schedule as soon as a property settlement is finalised, investors can recoup some of the costs and provide an immediate boost to their cash flow,” he adds.

youve sold your house now what

You’ve sold your house, now what?

The sold sticker has been freshly plastered on the board outside and the celebratory bottle of champagne is empty.

It is only natural to feel the stress relief — but enjoy that breather because the process is only just beginning.

Many people dread the thought of moving house, but it can be a cathartic and rewarding experience if approached with a positive mindset. 

Time is of the essence

To have your best chance of avoiding delays with lenders, it is important to start the conveyancing process as soon as possible after exchanging the signed contracts.

And if you intend to move into another property, you should align your dates for settlement to avoid any untoward, last-minute surprises.

Tick off the boxes

The first and foremost administrative task is to arrange insurance cover for your new home.

Likewise, contact utility and internet companies for disconnection and arrange for it to be on at your next address.

Countless other tasks can be undertaken in the weeks to come, such as redirecting mail, notifying banks and updating your driver’s licence.

Fresh start

Your next move will depend on your individual circumstances – be it renting, downsizing or upsizing.

But the perceived upheaval can vary according to what you intend to take with you.

Ask for three quotes from reputable removalists and even investigate the do-it-yourself option if your load is lighter than most.

Most removalist companies have an online tool to help you calculate what space will be required in a truck. 

Thinking ahead

If you’re heading to another place, ensure you have a copy of its floorplan so you can start mapping out where your furniture and belongings fit.

If on the other hand, you’re unsure of your next destination, it is probably best to investigate storage options. They are often an ideal source for sturdy packing boxes, including port-a-robes to transport your wardrobes.  

Create a welcome folder

If you hadn’t already prepared one for the sale process, this compendium for the next owner should contain all the various appliance manuals and warranties, receipts of improvements should they still be under warranty (i.e. damp proofing) and a timeline of major works completed, including contact details of who carried it out. 

Begin packing 

Try to reduce what you use to the bare minimum.

For example, keep out only the crockery, cutlery and cooking utensils you would use each day, and wash them at the end of each day.

If possible, label boxes according to the rooms in which they will be unloaded (i.e. Sarah’s room, kitchen, bathroom). During sorting, be sure to have boxes to take to the op shop and others you can list for sale online at Gumtree, eBay or Facebook Marketplace. 

Transporting copious amounts of food makes no sense, so prepare by cutting your weekly grocery list and consuming existing pantry supplies.

If anything, all that should remain for the move is your pantry staples and arrange for online grocery delivery, including the first night’s meal, when you’re busy settling in at your new address.

Clean break

There’s also the small matter of cleaning the home, which can often overwhelm many at a late stage.

Emptying cupboards well in advance of moving day ensure they can be thoroughly cleaned and only need a quick wipe as you prepare to depart.

Renters and often departing homeowners are required to provide professional clean of the existing residence.

Always have a Plan B

It is next to impossible for everything to run smoothly, particularly when there are elements outside of your control, so ensure there is a backup plan in place.

This may include staying somewhere close to your new home or moving in with family for a short stay prior to your next move. Remember that a little short-term inconvenience is worthwhile for long-term gain.

heat seekers staying warm this winter

Heat seekers: staying warm this winter

Winter is upon us and for homeowners and renters, that often means one thing: staying warm.

With the nightly and early-morning temperatures set to plummet, particularly in southern Australia and New Zealand, The Real Estate Voice offers several energy-saving, eye-catching and heart-warming ways to stay snug and cosy this winter. 

On the surface

Feature fireplaces in marble, cast iron, even stainless steel always evoke an atmosphere of warmth and comfort.

Fireplaces needn’t lay dormant in the warm weather, either. Packing a standalone open fireplace with ice and Champagne is an interior feature and conversation starter when party season rolls around.

Winter living accessories are also practical, stylish and essential for keeping heating costs down and your householders toasty warm.

Plush products with natural fibres not only look great, but they also work best at maintaining heat-seeking qualities.

Choose woollen rugs and mohair throws in living rooms and winter-weight merino wool doonas and wool-blend doona covers in the bedrooms to keep you and your family warm on the inside this winter. 

Don’t forget thick woollen socks and winter-warming sleepwear. 

Insulated for even temperatures

Protecting your home from the winter chill starts with a foundational approach.

If your home is newly built or even if you’re renovating, installing adequate insulation that regulates temperatures to ensure warmer winters and cooler summers is your best climatic defence.

Is the house insulated? When renting or buying, this should always be one of the first questions put to potential landlords or vendors.

The yourhome.gov.au and yourhomenz.co.nz sites provide minimum insulation levels for walls and ceilings in all localities. You will also find a surfeit of new build and renovation information that is designed to weatherproof and maximise efficiency for your home.  

Keeping cold air out and the warmth in

Pay attention to draughts that emerge through doorways and windows.

Regardless of the season, freshly circulating air is always recommended, but so too is the ability to control the temperature on the inside.

Ensuring that windows are sealed and doors fully closed is essential for keeping your home naturally warm.   

Get a move on

It’s important to keep the blood flowing, endorphins boosted and winter blues at bay with regular exercise.

This needn’t be a strenuous daily workout. Rugging up against all conditions and enjoying a brisk stroll with your housemates or family at a nearby park will keep everybody warm, fit and healthy.   

Visit homeware stores, fireplace suppliers, local rug weavers and handicraft markets for these and other winter-warming ideas and inspiration for your home.

fomo meets its match in market driver tina

‘FOMO’ meets its match in market driver ‘TINA’

Record-low interest rates and surging property prices in Australia and New Zealand have fuelled buyers’ fear of missing out, otherwise known as FOMO, since the pandemic was declared in March 2020.

But with the cost of renting closing in on that of standard mortgage repayments and demand for housing stock continuing to outstrip supply, TINA (there is no alternative) is fast becoming an equally motivating factor.

CoreLogic says average house values have increased 10.7 per cent in the year to date.  

And with Big 4 bank forecasts tipping further house price increases of up to 20 per cent over the next two years, the lure of property ownership is proving too tempting to many.

Buyer profile changing

First-home buyers have been integral to the FOMO phenomenon, with ABS statistics for the December quarter showing this demographic at their highest rate of owner-occupier loans since June 2009 (about a third of all owner-occupier loans).   

But CoreLogic says the influence of first-home buyers has decreased over the three months to April, coinciding with the end of the HomeBuilder government grant in March.

Consequently, the buyer profile has shifted to existing owner-occupiers (downsizers, upsizers and those moving), who accounted for 52 per cent, first-time buyers (21 per cent) and investors (25.9 per cent), which is increasing but still well below the decade average of 35.3 per cent.

CoreLogic says the tree change of buyers chasing more affordable properties in regional areas is coupled with a desire for more living spaces and better internet connectivity as the working-from-home trend takes hold on a more permanent basis.  

Investment was particularly strong in New South Wales and Queensland.

Appetite for risk

The number of low-deposit mortgages had been on the rise in 2020, adding to the volatile mix.

The proportion of mortgages taken with a loan-to-value ratio (LVR) higher than 80 per cent recorded its highest increase in 13 years in the December quarter.

But CoreLogic says the portion of new loans with an LVR of greater than or equal to 90 per cent fell from 11.3 per cent to 10.4 per cent in the past quarter.

The Australian Prudential Regulation Authority (APRA) quantifies ‘risky’ loans as those having a debt-to-income ratio greater than six.

This enhances the ever-present danger of negative equity – when a property’s value falls below the amount owed – should the lending environment or employment prospects unexpectedly change.

Affordability hard to ignore

With interest rates already at historic lows, the Reserve Bank of Australia has consistently stated it does not expect interest rates to rise before 2024.

The Reserve Bank’s official cash rate remains at the historically low 0.1 per cent, which means many fixed-rate mortgages are available for substantially less than three per cent. Variable rates are available in the same range. 

Given the optimal conditions, it makes sense for property owners to factor in future rises by creating an emergency fund for at least three months of expenses or paying more than the minimum repayment, to reduce the length of your loan in the long term.

real estate tax terms explained

Real estate tax terms explained

The end of a financial year prompts swift action for tax-related matters. 

This includes relevant information for property owners, renters and potential buyers in their bid to streamline real estate and financial processes.

With this in mind, our explanatory guide about tax terms and real estate phrases are designed to clarify, refresh knowledge, simplify selling-and-purchase terminology and assist with tax duties and expectations. 

Glossary of market and monetary phrases

Appraisal: essentially a property evaluation, an appraisal is a free service carried out by a real estate professional to provide an understanding of the possible selling price.

Body corporate: the name given to a governing party representing a group of owners in strata (apartment building) properties.

Building Code of Australia and New Zealand: the minimum-standard requirements for a building’s health and safety, as stipulated by the code boards. 

Buyers’ market: this term represents an oversupply of properties and other conditions that favour buyers.

Capital gains: these are a rise in value of a capital asset, such as property, which provides a higher value than the purchase price. Capital gains can only be determined when the property is sold. 

Conditions of sale: these are conditions added by the buyer and seller to a sale contract that must be adhered to before the contract is finalised.

Cooling-off period: a period following the sale of a property in which the buyer can back out of the sale, based on certain conditions.

EOI: this stands for expressions of interest and is used to determine interest, and the potential selling price, for a property. 

Guarantor: a person who agrees to take over loan payments and other contractual obligations if the borrower fails to do so.

Loan-to-value ratio: this is the ratio of a loan to the value of a property. 

Negative gearing: This essentially refers to borrowing money to invest in a property where the income from that property is less than the expenses.

Reserve price: the lowest possible sale price a seller will accept at auction.

Sellers’ market: market conditions where an undersupply of property pushes up prices, favouring the seller.

Settlement: the completion of a property purchase where the buyer pays the full amount in exchange for legal ownership of the property.  

Stamp duty: a state tax paid by the buyer on contracts, including property. 

Under contract: the seller and buyer have agreed on a price for a property and signed a contract. But the contract is still subject to conditions such as the cooling-off period (see above). 

Valuation: conducted by an accredited valuer, a valuation is used for legal or banking purposes to determine the value of a property. 

For information about these and other market and tax-related terms, consult your real estate agent, bank or financial planner.

buying land what to consider

Buying land: what to consider

With record construction figures and government stimulus propelling the growth of new-build industries, there’s increasing interest in building on property dreams from the ground up.

Regional appeal, design customisation and cementing lifestyle aspirations are the major attractions. But it’s paramount to be aware of the pros and cons of buying land and what to expect with new-house construction before you commit.

Everything in its place

The dwelling’s placement on the block is vital. Ideally, the allotment with a north-facing backyard should allow clear access to the north (called solar access).

It should not be overshadowed in winter by buildings, large trees, fences or other obstructions to the north, so light and warmth can be maximised.

Generally speaking, solar access is best from:

  • Rectangular blocks with long boundaries running north-south or east-west, especially so if less than 500 square metres;
  • Blocks that run north-south that are wider than 13 metres;
  • Blocks that run east-west that are wider than 14 metres, except where a street or parkland is to the north (in which case the block can be narrower); and,
  • Blocks that allow your home to be placed at a distance of six metres or more from a single-storey obstruction to the north, or 11 metres or more from a double-storey obstruction.

Big-picture outlook

It’s natural that, after visits to display home villages, people can easily picture a preconceived house size in their mind.

But the realities of building can kick in.

Setbacks, building envelopes and height restrictions can all reduce the amount of land on which you can place your home.

In other words, don’t assume that a 14-metre-wide block can accommodate a 14-metre-wide house. 

And don’t forget to factor in where your driveway will be in relation to the home (the crossover is the access point from the street to your block).   

Time factor

The length of time from buying the block of land to starting building will differ with every sale, but it can take on average at least 12 months.

Part of the reason is the certificate of title, which is necessary before any construction work can begin. Another is the infrastructure.  

Essential infrastructure

When it comes to creating infrastructure in new estates, it’s said that development resembles an iceberg.

It’s estimated that only one-third of the work is visible above the ground, with the majority of works (electricity cables, sewerage, water and gas pipes and internet) hidden away from view. 

Thankfully, the services for house blocks in most estates are ready to be connected. But never assume – always ask.

Titled land advantage

Once your block is titled, your builder conducts a soil test and updates any site costs.

Approvals, such as building permits and unconditional finance, must be obtained, and settlement on the block finalised before the site is prepared for construction.

The upside of waiting for a block to be titled is greater savings potential.

Construction is generally broken down into several stages and you will usually be invoiced a percentage of your overall contract value at the completion of each stage: slab; frame; lockup; fixing and completion.

The complete package

Of course, buyers can choose to avoid all the stress and wait time if they’re prepared to pursue the option of a house-and-land package. In this way, there are fewer surprises as builders have already accounted for all costs.

Real estate agents, property developers and investors can advise further on the challenges and benefits of buying land in your region.  

the pressures driving regional property growth

The pressures driving regional property growth

Affordability and remote accessibility are two main motivators for the exponential growth in regional real estate. 

COVID-19 played a key role in the initial push towards urban fringe or regional lifestyles. This was enhanced by remote work opportunities that were emphasised by pandemic-led realities.

Yet even prior to the pandemic, it’s a common misnomer to believe that housing prices have always been more affordable in regions than they are in capital cities.

Reporting on the supply and demand of regional housing a decade ago, the Australian Housing and Urban Research Institute says earlier research indicates equal or higher property values than some urban markets, at least in regional hotspots and potential rural areas.

“House price movements since the year 2000 have affected some regions more than others, with amenity-rich ‘sea-change’ or ‘tree-change’ localities especially affected by rising house prices,” the March 2011 report says. 

Further research shows that uncertain supply processes for the rental market in rural centres have also contributed to the high degree of unaffordability in housing. 

Pandemic-inspired growth factors

Although COVID-19 challenged many local industries, the pandemic proved to be a major boon for the regional sector. 

Federal government stimulus in 2020, such as the First Home Owner Grant and HomeBuilder Grant, earlier-than-expected downsizing investment and regional construction spikes including build-to-rent and social housing developments, led the charge.  

The government-motivated regional building boom, including an increase in lower-residential construction activity contrasting with reduced levels of high-density construction, is confirmed in economic forecasts by the Reserve Bank of Australia.

Equally, the widespread rental affordability crisis and dwindling housing supplies in prime regions fuelled heightened market uncertainty. This created a spectre of FOMO (fear of missing out) among potential home buyers.

With affordability levels at an all-time high, an upsurge in non-bank lending, such as line-of-credit and refinancing home loans and the omnipresent Bank of Mum and Dad, ensued.

How to capitalise on regional centres

Research and timing hold the key to securing top-performing properties in smaller regions.  

Industry analysts say population growth and infrastructure development alone do not determine the full worth of affordable investment opportunities.

New transport networks, especially airports, and hospital construction are obvious drawcards in lesser-known regions. 

But investors should also look for next-level or untapped areas whose markets indicate growth in median household income that surpasses inflation. 

Similarly, burgeoning local economies are evident in the volume of new businesses, which inspires investor confidence and encourages spending.

Real estate experts also suggest that statistical data, such as auction clearance rates, vendor discounts, vacancy rates and rental yields, offer keen insight into value-adding for an entry point into regions with investment potential.  

restoring period homes to their former glory

Restoring period homes to their former glory

Owning or buying a period home is a pleasure and privilege, but not without its maintenance challenges. 

Reflecting current and recent trends, the National Trust is noticing an uptake in the restoration of period residences from the 1940s to 1960s.

As a general guide, there are several aspects to consider when caring for, or renovating, an older house — style, research and a close inspection.

Starting point

An online search or even your local library is a good place to start if you want to identify the style of your house.  

Period styles

Broadly speaking, the following list summarises period housing styles:

Colonial, 1835 to 1850: Simple cottages of which not many examples survive.

Victorian, 1851 to 1900: Houses that date from the discovery of gold, and cover many styles including Gothic Revival, Italianate and Boom style. Many inner-city terraces date from the Victorian period.

Federation, 1901 to 1918: Includes the styles known as Queen Anne, Federation or Edwardian, typically in red brick with terracotta roof tiles and chimneys and complex roof shapes.

Inter-War, 1919 to 1939: This period is notable for the California Bungalow style, as well as Spanish Mission, Tudor Revival and Moderne.

Post War, 1946 to 1959: In a period when materials and labour were in short supply, houses became simpler with more open-plan design, use of lightweight cladding materials, flat roofs, and carports instead of garages.

Reference guides

Not only can it be fascinating to find out more about your house, but it will also be a great help in guiding your restoration or renovation works.  

Be prepared to spend time and be persistent. First, see if your house has already been researched. To do so, try checking with the local historical society, state libraries, university libraries or the National Trust. 

It may be included in a conservation study commissioned by your local shire or municipal council.

These sources may also provide contacts for restoration specialists of period homes. 

In addition to historical records, a detailed inspection of your house can provide clues to its past. You may be able to identify changes that have been made to the house during its life.  

Shine a light on renovation clues

Take a torch and look in the sub-floor for new or different-sized pieces of timber used in floor framing, or different construction methods, to see if there is any debris of former materials.

Look under carpets and floor coverings for changes in floorboards — for example, strips of new flooring or an area where floorboards run in a different direction may indicate where a wall was removed. 

Similarly, check the roof space via a ceiling hatch and see if there are any clues to changes in the roof form. You may find evidence of the original ceilings above the existing ceilings if they have been lowered.

Outside your house, look for differences in bricks, roof shape, roof cladding, chimneys or window frame sizes and materials. All of these should help in determining if the house has had previous renovations or additions.  

Inside, differences in doors, skirtings, cornices and architraves may indicate that alterations have taken place.  

Older buildings are most likely to have had a bathroom added later, as toilets were initially housed in a separate outside building and baths were often not a permanent fixture.

Once assessed, taking time, consideration and consulting a restoration specialist for maintenance advice and amendments will help bring your period home to life.