Is Renting or Buying a house beneficial

However there is a small minority of people that do believe  in renting even though they can afford  to buy their own house, which raises the question is it wise  to rent  rather than buy you dream home ?

Another type renting that’s still not caught on in Australia is owner leasing of properties, the buyer gets a long term lease for a property for a fixed term and then then  when the long term leases expires, the buyer has the option to buy the property.  These  sort of leases are more popular in  the US , CANADA and EUROPE. This in some circumstances can have a tax advantage .depending on the current Property and tax rules.

The question of  whether renting a house or buying a house is beneficial can mainly be answered by  each person doing  the maths on their ongoing expenses to see in which situation they will be better off. Basically its doing a calculation to calculate if its interest payments  that is money down the drain or rent payments that is money down the drain.

Contrary to popular belief  “ that rent money is dead money” or “rent money is money down the drain” it is quite actually the opposite in many circumstances. The fact that “rent money is money down the drain isn’t true” can be proved by the fact that mortgage payments on the house can be higher than the rent, even before capital (principal) repayments are made. And at the top end of houses and apartments, the interest rates can be more than double rent rates.

In order to understand how more repayments are being made on the mortgage in comparison to rent , you will also need to understand the  “difference between the principal and interest repayments in the mortgage or loan” . In addition to repaying the principal, the borrower is obligated to make interest payments to the lender

Principal - The amount borrowed or the amount still owed on a loan, separate from interest.

Interest Repayments -  Interest is essentially a rental, or leasing charge to the borrower, for the asset’s use. The amount basically is a percentage of the  principal.

Investors often get a Interest only loan  so that  they can benefit from lower repayments and get a tax advantage. This option is not available mostly  to owner occupiers or people buying a home to live in.

Costs & Expenses for Renting vs. Buying a house

Coming back to the “Renting  vs Buying house” argument , one can clearly make  a far better return on the money used  as  capital repayments for a house loan  by investing that money in shares or your own super. This could be quite profitable  and worthy if you are good at investing money and with the share market recovering quicker than housing market recoveries sometimes this is a better option.

The other expenses that are often overlooked  when calculating the difference in expenses between renting and  buying are also expenses like, TRANSFER COSTS ( real estate agent fees , conveyance fees , stamp duty ), Mortgage insurance fee ( if you cant afford a 20% deposit) , Ongoing Maintenance and repairs costs , Ongoing rates payments and home and or contents insurance costs. Over years these additional costs can certainly be added up to become a massive expense that could be used elsewhere or for investment.

In addition to these factors , many property analysts say the the Australian property market is overvalued even with the fall in price values due to the GFC, so there is possibly  less of a chance of property gains ( or your property value increasing in a hurry in the shorter term period)  to get gains from your property over renting).

Apart from all the financial differences between Home Ownership and Renting, most Australians like the idea of owning their own house rather than renting. Home owner ship definitely gives many  a person  the satisfaction of owning their own little place  which can be invaluable to that person. If you are a bad saver of money , buying a home is often also a good compulsory saving in a investment that can be good in the longer term and also save you rent payments  when you are on the pension or retired.

Concluding  the argument  between renting or buying your house ,  a financial savvy person who  is more money minded  than actually being more satisfied and happy owning their own house, can make use of the benefits  of renting  at the expense of possibly some soul satisfaction.

REIA  Fact sheets – To assist you further, the REIA have developed a series of fact sheets on renting and leasing.  To view the fact sheet for tenants -Renting a Property, click here.   To view the fact sheet for lessors – Renting a Property, click here.

[PDF] Rental properties 2011 – Guide for rental property owners …. Rental properties 2011 will help you, as anowner of rental … rental property owner an assessable recoupment under

Pros and cons of buying vs Renting

Understanding your mortgage by Citibank – http://www.citibank.com.au/aus/banking/pdf/11287_UnderstandMortgageDL.pdf

Victoria Land real estate owner Address search

This change however is not applicable to Valuers. While RP data  one of the bigger provider of real estate ownership data adjusts it systems   valuers using this system will also be temporarily affected.

The Property, Titles and Maps web pages of the Department of Sustainability and Environment (DSE) provide information about land titles, property data,valuations, land surveying and naming places in Victoria.

The Department of Sustainability and Environment (DSE) through Land Victoria collects, manages, releases and sells a wide range of property information for Victoria and most of it is available online.

LANDATA Home Page – www.landata.vic.gov.au

LANDATA® is Land Victoria’s online search service, providing access to title and property information for the general public and a range of professional clients.

Real Estate Search Restrictions – Victoria

The government agency “LANDATA” requires that RP Data make changes to the property services and information products to ensure that accessing owner names and addresses from government records is immediately restricted. Rp data is proposing  this sector become a collaborative initiative with the industry   becoming self regulated with government oversight instead of restrictions being imposed

Victorian Land Searches and Victorian Conveyancing are restricted to organisations that have signed the current CITEC Confirm Customer Agreement.

Further restrictions apply to Victorian Land Index Searches (search by owner name, lot/plan, volume/folio, address). To access these searches clients must sign the Landata Deed of Grant in addition to the CITEC Confirm Customer Agreement.

View Larger Map

Link credits:

[ http://www.confirm.citec.com.au]  , [ http://www.dse.vic.gov.au ] , [ http://www.landata.vic.gov.au/ ] , [ http://www.land.vic.gov.au/ ] ,  [ http://www.land.vic.gov.au/ ] ,

The key fact sheet ( or KFS) has just been introduced by the government  since 1 Jan 2011  , making it better for  consumers to  make a better choice  while choosing their new home or investment loans. This has been brought into action by amending the National Consumer Credit Protection Act 2009 (including the National Credit Code) to give effect to the Government’s Fairer, Simpler Banking policy. This policy makes it a requirement for lenders to give borrowers a Key Facts Sheet for home loans and a Key Fact Sheet when they apply for a credit card.

Some banks have requested staff to provide this only on request and this document can be requested by the consumer which sets out the details of the loan in simple understandable english  and not lawyer speak. The details of this regulation can be found on the treasury government website over here and you can also find a sample Key fact sheet (KFS) for home loans or investment loans over here.

Strangely enough Commbank has this on their key fact Info sheet  “Key fact sheet pdf file”
Note: You should only provide the Key Fact Sheet when requested by the customer and not
in all instance

Interestingly  the paragraph below “There may be better deals available. Ensure that you obtain Key Facts sheets like this one from other home loan providers to compare this mortgage with deals from other lenders.”  supported by the listing of the commercial websites  as noted below helping  to promote these websites,  who get a commercial benefit again from promoting the banks

This sheet below will definitely help you decide  which loan  or credit card is the best and take the guesswork out of the game

For more information about home loans visit the ASIC financial tips website: www.fido.gov.au.
For information on other lenders and their products(commercial websites)  —>, Visit: betterbanking.choice.com.au, www.canstar.com.au, www.infochoice.com.au, www.ratecity.com.au or www.mozo.com.au.    

Strangely enough “commercial related websites  is also included in the sample sheet, which includes the web address of not only the government body FIDO by ASIC  but also  profit making commercial  entities  that also do research like ratecity.com.au  and mozo.com.au”

Pic for illustration purposes only

Property is 240 kilometers north of adelaide

• 4 kilometers east of the township of wirrabara.
• 970 acres of farming land
• Seeking no less than $2000 per acre
• For more details  and contact details  go here 

The Shared Start Scheme is a West Australian State Government initiative to assist YOU achieve YOUR dream of home ownership. Check out this listing  to get you entry into the market at a lower price

BRAND NEW APARTMENT IN CITY LOCATION for just $245,000

Western Australia’s first home buyers benefit from the scheme by sharing the ownership and cost of their first home with the Department of Housing and Works. Properties available under this scheme are offered for sale under co-ownership arrangements with the Department of Housing. An eligible Buyer can purchase 70% of a property, with the Department of Housing retaining the matching 30% share in perpetuity. You pay no rent or interest to the Department of Housing for their 30% share of the property.

Check out this Shared start listing here  at realestate.com.au . $245,000  @ 56/76 Newcastle Street, Perth, WA 6000

The price quoted in the above listing is 70% of the value of the apartment. Properties cannot be sublet or leased to other parties and the private co-owner can never acquire the Department of Housings share.

Properties brought through this scheme  may be sold at any time, but only to the Department of Housing using a Market Valuation process to determine the current value of a co-owners share.

You may be eligible for SharedStart laon from Keystart if you answer is yes to all the following:

• I cannot afford a home loan to assist with buying 100 per cent of a property regardless of proof of savings
• I am a single applicant earning a maximum gross income of $70,000 per year, or
  We are a couple/family earning a maximum gross income of $90,000 per year, or
  I/we work in the North West of WA (above the 26th parallel) earning a maximum gross income of $110,000 per year and I/We would like to purchase a property and live in the North West area
• I am a permanent resident of WA
• I am 18 years of age or older
• I will live in the purchased property as my principal place of residence for the life of the SharedStart loan.

The above is not a full list of Keystart’s eligibility criteria. It is an indication only. You must contact Keystart on 1300578 278 (1300KSTART) for a discussion about full eligibility and to see if you can be prequalified for a SharedStart loan

To get more information on this scheme from the government website go here

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Chinese can get a big property in Australia with a big backyard and pool for the same price of a small littel apartment in Shanghai and so property in Australia is definitely a good bargain for some Chinese who have the spare ca$h

Local aspiring homeowners  and investors are complaining that they are being priced out by foreigners who have no intention of living in their new properties and making worse the situation for them to own their dream home by these buyers inflating the prices of property in Australia. Real estate agents like J P DIXON from Melbourne are exploiting this interest by chines buyers by recently going to china to participate in the “China International Luxury Property Show”  recently

As per  Treasury.gov Currently, all temporary residents and non-residents including businesses must notify the Government of their intention to acquire residential real estate, and must comply with post-purchase conditions on its use, development and resale.

Under Goverment rules for property buying for foreigners

Foreign nationals to buy are able to buy second hand dwellings if they hold a temporary visa

New laws dictate that foreigners can no longer buy existing Australian homes as investments.

Temporary residents may buy one existing home to live in, but must apply first with the Foreign Investment  Review Board. Then they must sell their property when they leave Australia.

Foreign investors can continue to buy new or off-the-plan properties without limitation.

International students who become permanent residents can buy property

These recent changes have made it easier for foreign companies and temporary residents, such as 12-month business visa holders, foreign students, and their parents, to invest.

Exemptions for real estate buying in Australia

Certain acquisitions do not require notification or approval under the Foreign Acquisitions and Takeovers Act 1975 (also referred to as exempt acquisitions)

1. You are purchasing new dwelling(s) from the developer, where the developer has pre-approval to sell those dwellings to foreign person
2. You hold a permanent resident visa and you are purchasing residential property
3. You are purchasing property from the Government (Commonwealth, State or Territory, or local)

Check out more exemptions here -> property buying exemptions and for more detailed legilation and policy , rules for foreign ownership in Australia you can visit the goverment website here

Raids On Prime Australian Agricultural land and farms by overseas Investors

These raid on Australia’s prime agricultural land is strategic and systematic. Many countries like the Chinese and Singapore government have increased their  investments in Australia. Countries such as Qatar in the Middle East have even set up government departments dedicated to securing future food sources, with the easiest solution being to buy foreign farms. As per normal rules unless a sale is worth more than $231 million, the Federal Government does not have to know about it

The biggest foreign raiders are actually the Americans, plunging over $39 billion into Australia, followed by the UK, China, Japan and Switzerland

Links:

• Additional detail is on the Foreign Investment Review Board website at www.firb.gov.au.
• Australias-properties-for-sale/

• Foreign government investments in Australia

• China accused of land grab

• 50 Australian resources projects worth more than $500 million that are majority foreign controlled

The other benefit from owning  real estate  which can be  appreciation of value of  your property plus possibly a regular income flow  but also significant tax benefits.  some tips to benefit from property ownership during tax time.

Tax deductions for property *

If you own a property  and you are getting rental income from it you can qualify for certain tax deductions based on your circumstances. Some standard claimable deductions are listed below.

• Advertising costs ( To find tenants)
• Agents Commission (To collect the rent)
• Rates and Land Taxes
• Depreciation
• Travel costs to inspect property
• Repairs
• Security costs
• Insurance on buildings
• Water and sewage
• Interest on borrowings

Rent and rental expenses

Tax needs to be taken out from rent received by you  when its received into or credited into your account. Rental expenses claimed can be disallowed  if you are renting a house or property to a relative or family and you are not charging them the going commercial rate in the market.

Capital gains Reductions

If you sell a investment property  12 months  after you buy it only 50% is taxable. This can apply to Land as well as Holiday homes.

Residence  exemption

Claiming tips

Keeping a separate account for your property income and expenses can ease the pain of record keeping.

 

It is not necessary for you to get a Australian Business Number (ABN)  if you want to lease a residential property.

 

Keep all your receipts for expenses for yuour tax deductible expenses to be easily verified.

More technical property deductions

In some cases  a building write off deduction can also be claimed  at the rate of 2.5 % per year

If you make a capital gain after you retire and turn 60  from the sale of the property , the gain could be tax free if  that property  was owned by your self managed superfund and would be not included in your taxable income.

Capital gains can be reduced on sale of holiday homes  by holding on to receipts of non –deductible expenses incurred while maintaining the house.

In some cases depreciation schedule will be necessary to maximise your allowable tax deductions on any property that you own as an investment.

* Before claiming deductions it is advised to see a professional accountant or tax agent  to verify that you are correctly claiming the  deductions that are allowed to be claimed without incurring any penalties in the future.

Is your property agent licensed

Its not aussie slang but just kosher slang !! ,  when we ask you if your property agent is proper!!

Most of the times  property agents are good for property investors  and people who want to buy and sell a house or property, but get the wrong property agent or not a professional one and “boy oh boy “ you can be in trouble or even a big loss. Ask me i almost got gyped a cool $10,000 dollars  when i did a property settlement of my previous house  to buy  my new property  , just because  the bank officer  ( of a big  reputed bank) was not well informed about settlement procedures and transfers.

With real estate buying and selling and property managing, you dont have a guarantee always that you are getting the best person to manage your property,  but thankfully at least you can take precautions. One such way is at least to check if your property manager is properly registered (Licensed) and accountable.

Check for Licensed Real estate and property agents

The Queensland  government  for office for fair tarading  hold a public register of licensed property agents and registered salespeople. To be real estate agent  or act as a property manager in Queensland, you must be registered with the Office of Fair Trading.

On this page here at the office of fair trading, Queensland  ->. property-agent-licence-check

you can search all  licensed property  and real estate agents. May also be beneficial to look around the site and see what other search registers are available. You can search this register online for free , but if you want a record of your search  with more details you can get it for a fee ( click the link above for more info).

NSW – Property services licence check

To check the details of a particular agent, salesperson or manager, please proceed to ‘Start licence check’ button below. For further information and assistance, contact NSW Fair Trading on 9372 9299.

Start licence check

If the above button does not work visit this page-> NSW CHECK

WA – Real Estate and Business Agents licensing

In Western Australia, individuals, partnerships or companies wishing to operate as real estate or business agents are required, under the Real Estate and Business Agents Act 1978, to be licensed and hold a current triennial certificate. More details here

You could possibly do a check  for licensed property agents in your state by  checking at your state fair trading website ( or equivalent of the fair trading website ) in your state  for more details.

1.Managing Your Investment Property: The Essential Guide to Property Management in Australia and New Zealand -Rachel Barnes

Book –> Managing Your Investment Property: The Essential Guide to Property Management in Australia and New Zealand - > Full review here

2. The Australian Dream and $1 Properties

BooK – > The Australian Dream and Properties

3. Mastering the Australian Housing Market

Book –> Mastering the Australian Housing Market - > Full review here

4. Buying a Home in Australia: A Survival Handbook

Get the book –> Buying a Home in Australia: A Survival Handbook - > Full review here

5.How to Create an Income for Life – Margaret lomas

Get the book –> How to Create an Income for Life - > Full Property Investment books review here

Its a busy time for property investors as they near the end of the financial year. There aren’t many investors in the current property market, due to people being cautious about property investment.

But this might be about to change as rental vacancy rates across Perth are falling. Rising rents are also an indication that we are entering another phase of the property cycle. Currently its a buyers market with more than 17800 properties for sale on the market.

There is still reasonably tight vacancy rate that assures the investor a large selection of keen tenants. This definitely is getting renewed interest from investors in buying rental properties to cash-in on the favourable rental market.

Tips For Property Investors

• Better investments are more preferred in suburbs which have a consistent population growth, such as near the city or fast growing regional centres.
• Prospective investment properties should be easy to maintain.
• Close to public transport, shops and schools. The potential of educational institutions and community infrastructure can increase the value of the investment property.
• An ideal investment location is where the demand for rental properties exceeds the supply. But investors need also to balance the cost of the purchase with the return on investment based on the rent in that location.
• If a property is chosen with prospects of good grow in value, it can be an added bonus of capital growth to the property in addition to the negative gearing (tax deduction) you can receive.
• Another tip to good property investment, is to look for under valued houses in a pricy suburb or in a suburb close to a established suburb.
• Re-developing properties is another good way to maximise your property investment. Choosing one block with re-development   potential for multiple blocks can maximise your return.

Data and research in relation to making these important property investment decisions could always be sourced from websites like Realestate.com.au, Rpdata, Rismark and REIWA. Make sure you always discuss plans with your bank, mortgage broker and financial planner first.