SMSF Properties – what can and cannot be done to them?

Borrowing by a self- managed superannuation fund (“SMSF”) to purchase property, whether it be residential or commercial, is not a new investment strategy however care needs to be taken when trustees wish to start to make alterations and improve these properties.  What is the current legislation? Current Limited Recourse Borrowing Arrangements (“LRBAs”) allow for an SMSF to borrow money to … Read More

Foreign Person and Land Tax Surcharge problem in family trusts

From 31 December 2016 discretionary trusts (commonly known as family trusts) holding residential properties could be subjected to the foreign person rule and could be liable for an extra 0.75% land tax cost on the unimproved land value of the residential property (on top of the existing 1.6%). Example Family Trust A has a potential beneficiary that meets the definition of “foreign person” … Read More

Foreign buyer crackdown

  The Australian Tax Office (ATO) has ramped up its efforts to hunt down foreign buyers of Australian real estate, with the employment of 50 compliance officers who will investigate potential breaches of the law by cross checking the records of approximately 11 million people to find illegal owners. The ATO is responsible for overseeing foreign property investment and is … Read More

Have you registered for land tax?

  Depending on where the property is situated, land tax may be applicable to you. Land tax is a state tax levied on the owners of land in all states of Australia except for the Northern Territory. Each state has their own rules, rate of tax and exemption threshold, but for the purpose of this article, the focus will be … Read More

What Capital Gains Tax will my family have to pay once I’m gone?

  Capital Gains Tax (CGT) is not payable as a result of your death, but your beneficiaries pay CGT if it is applicable, when they sell the assets they have inherited. They inherit your cost base if you acquired the asset on or after 20 September 1985. If you acquired it before that date, your cost base is the value … Read More

Banks tightening up on investment loans

  Over the past 2 months, Australia’s largest banks have all tightened up on loans to investors. This is off the back of APRA’s (Australian Prudential Regulatory Authority) restrictions on the major banks to limit their lending to property investors (as opposed to owner occupiers) at 10% growth per annum – they have been growing more than this. Banks have … Read More

How to save GST on the sale of a property using the margin scheme

In certain circumstances, GST on a taxable supply of property can be calculated by using what is called the “margin scheme”. Under the margin scheme, the GST payable is calculated on the “margin” on the sale, rather than the total sale proceeds. The margin is the generally the excess of the sale price over the purchase price or, if the … Read More

WHAT TO BEWARE OF IN A HOT PROPERTY MARKET

  Over the past 12 months, you have probably read and heard about the hot property market, with unprecedented auction clearance rates and large increases in prices. This can lead to some problems if you have bought a property and you intended to borrow the money from the bank to fund the purchase. We have heard of the following scenario … Read More

INTEREST RATES − HOW LOW CAN THEY GO?

  This month’s announcement by the RBA to cut interest rates to historically low levels, has seen mixed reactions from Australia’s lenders, with some passing on the full rate cut, whilst others only some. While it is in our nature to all try to forecast where we think rates are going to go from here, it is difficult to get … Read More