It’s in the news every day and we hear and see it in all the news bulletins.  Housing affordability in Australia is becoming out of reach for many Australians.  In 2008 the Federal Government committed $1 billion to implement a scheme to encourage investment, stimulating construction of up to 50,000 high quality homes and apartments, providing affordable private rental properties for Australians and their families.

Negative Gearing has always been the accepted investment strategy for property ownership.  But what if there was a strategy where the property could be cash neutral or even cash positive while still being able to take advantage of all the depreciation and income deductions?

The National Rental Affordability Scheme (NRAS) does just that.  The NRAS scheme offers annual tax free Incentives to property investors for ten years equaling $91,400 across the program.

The incentive is indexed according to movements in the rents component of Housing Group CPI. 

By providing the rental at 20% below market rent, the stimulus provides affordability for the rental market, while subsidizing the investor with the tax fee incentive.  

NRAS is the only program in place, where if the tax rebate is greater than your tax payment, you will receive a cash return.

Don’t confuse the NRAS with Social Housing; they are two completely different programs.  With Social Housing the government sets the rent rate, where with the NRAS the market determines the rate.

If you are looking for property to include in your investment strategy and wondering whether an NRAS approved dwelling is right for you, speak with your financial advisor to get an understanding of how the tax rebate applies to you.

If then you feel a NRAS approved property meets your investment strategy then feel free to contact me on 0431 141 556.

Author

Fabian Calle