Have you ever wondered if you could give back to the community while generating returns from NRAS investments for the next 10 years? Well, you can, if you leverage on the National Rental Affordability Scheme (NRAS) Incentive to invest in an NRAS property.
In this article, we will talk about the:
- National Rental Affordability Scheme (NRAS) Incentive
- Benefits of property investment
- Risks of property investment
NRAS investments through National Rental Affordability Scheme (NRAS) Incentive:
The National Rental Affordability Scheme (NRAS) is an affordable housing initiative introduced by the Australian federal government, alongside the state and territory governments in 2008. Different from social housing, the NRAS provides eligible renters in the market to rent a private home 20% below the market value rent, reducing the rental burden on low to moderate-income earners.
By leveraging on NRAS investments, you can help to provide more NRAS houses to those who are in need. On the other hand, you will also receive an incentive payment from both the federal government and the state and territories governments for the next 10 years. The incentive paid out will be in the form of a refundable tax offset (RTO) certificate. Alternatively, a cash payment is possible if you are investing on behalf of an endorsed charitable institution.
To access this incentive, you need to rent your property to one of the 1.5 million eligible renters in Australia, 20% below the market value rent. At the end of the 10 years, you can continue to keep the property but the property reverts to a standard property investment, which is subjected to normal tax rules and regulations.
Sounds like a good deal? Hold on, you still need to understand the benefits and risks of property investment, which is not bound only to NRAS investments.
Benefits of property investment:
Investing in a property can help to generate cash flow in the future once you have paid your mortgage off. In the long run, your property will appreciate over time, you can earn a profit when you sell that property off.
If you are investing in an NRAS property, you can apply for tax claims with an RTO. Even if you are just investing in a property, you might also be eligible for a tax deduction. Given that the cost of your investment exceeds the income generated from your investment. This is negative gearing and is common in property investments.
Risks of property investment:
Investments come with a certain amount of risk, no matter how big or how small the investment is.
A property transaction can take up months before you could generate liquid cash for your own use. If you are seeking to obtain quick cash, consider refinancing your loans instead of selling your investment properties.
You also have to evaluate your current financial position before investing in a property. Different from buying a residential property, property investment comes with other additional fees such as establishment fees, council rates, strata levy and management fees.
Property investments are lucrative, but they are also risky. If you are unsure if property investment is for you, contact us for a free consultation session today.
The information provided is general in nature and does not constitute financial advice. Please speak to us for recommendations on your individual circumstance and requirements.