5 Great Reasons to Recommend NRAS

Here are just 5 great reasons to recommend NRAS to your clients

An NRAS property can help your clients tax position.

Like all investment property, the Australian Taxation Office allows investors to claim deductible losses for the costs incurred whilst holding an NRAS approved property. All the usual allowable deductions associated with owning an investment property are allowable for NRAS approved properties too; costs such as interest, property management fees, insurance, council rates, strata fees, water bills and depreciation for example. But unlike other investment property, NRAS approved properties also offer significant additional claimable deductions because investors receive 20% less rental income and also pay an NRAS compliance fee. These are costs that investors don’t incur with non NRAS investment property. The end result is a bigger deductible loss, which can mean an NRAS property can be a fantastic way to reduce your clients tax bill (* your clients should always seek professional tax advice on how this may work for them).

NRAS properties are usually negatively geared AND cash flow positive.

Reducing the amount of tax you pay is fantastic, but buying property just for tax breaks is kind of silly. We all know that. Investors can only ever get a percentage of their “ losses” back from the tax man, after all. But this is where NRAS is so unique! NRAS properties are both Negatively Geared AND Cash Flow Positive. The NRAS incentives are what make all the difference. The tax free incentive turns negatively geared NRAS property into a cash flow positive property and generates significant amounts of tax free surplus income.

NRAS properties can create wealth.

Under most circumstances, an NRAS property can help your clients pay off their non deductible mortgage in less than 15 years.

How? Well, the surplus tax free cash flow that an NRAS property can deliver to your clients every year for ten years, can be redeployed to their non deductible mortgage. The result is accelerated repayment of the non- deductible debt, potentially saving them many years of repayments and a significant amount of interest.

Other wealth creation

Even if your clients don’t have a non deductible mortgage, the surplus tax free cash flow generated by an NRAS property can still be put to powerful use. The repayment of personal loans, Credit Cards and other high rate debt, or additional non concessional contributions to Superannuation or Self Managed Superannuation Fund for example. Or how about using it to supplement the holding costs on other non NRAS, loss making property investments they might already have? Perhaps it can be used to quickly build up a deposit for the next property? In most cases you’ll have between 6-8K tax free income at your disposal for each of the ten years, so you can use it in any number of ways to create wealth that a non NRAS property just wont deliver.

Socially Responsible/Feel Good investment

NRAS was introduced to assist in providing discounted rental accommodation to essential / key service workers in areas of need, so not only can you can pay off your mortgage in half the time or less, build up your super, build up a property portfolio, all without any out of pocket expense, but you can feel socially good about your investment, too!

 

USEFUL NRAS LINKS

http://www.ato.gov.au/content/00179876.htm

http://www.comlaw.gov.au/Details/F2011C00373

http://www.fahcsia.gov.au/our-responsibilities/housing-support/programs-services/national-rental-affordability-scheme

 

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