If you are one of over 1.69 million* Australian property investors preparing to lodge their annual tax return, are you aware of what to declare and how to make the most of your investment strategy?

Ahead of the next financial year, thoroughly research your tax obligations and claimable expenses to find out how to use these to your advantage for this tax return and for the future.

Mortgage Choice company spokesperson Kristy Sheppard said, “If you haven’t already, now is an ideal time to assess your financial position, re-examine suitable investment strategies and explore ways to better use these to benefit your tax situation and property goals.”

“There can be numerous tax and other benefits associated with owning an investment property. The trick is to know what they are and how to make the most of them over the short and long term.

“Negative gearing entices some investors to property. This occurs when the combination of annual home loan interest repayments plus any deductible expenses is higher than the rental return. The loss is offset against an investor’s gross income, meaning they are taxed on the reduced amount. On the other hand, positive gearing – where rental income exceeds the deductible expenses and loan interest – is preferred by others. It is an individual decision to make with care.

“Despite the tax benefits and potential for long-term capital growth, it may be tricky to eventually profit from a property that runs at a loss. It is a good move to consult a professional tax adviser and mortgage broker before choosing a loan and buying property, to learn about the tax deductions available on your potential investment and what home loans suit your plans. You may also want to glean knowledge from property research companies, buyers’ agents and financial advisers.”

Mortgage Choice suggests investors review the following aspects of their strategy:

Know what to claim

As an investor you may be able to claim tax deductions for your rental property/ies on expenses such as: travel to collect rent or inspect the property, advertising to attract a tenant, property agent and/or management fees, body corporate fees, council rates, gardening, cleaning, pest control, building insurance, repairs and maintenance, water, home loan fees and loan interest. Check the Australian Taxation Office for a list of claimable rental expenses and/or consult a tax professional.

Don’t forget capital gains tax

Unless there is a capital gains tax exemption when selling your property (ie. it is your principal place of residence), you pay tax on profit made above the original purchase price. Keep in mind capital losses (ie. no profit is gained upon selling it) are not deductible against your ordinary taxable income but they are used to reduce any other capital gains you make from assets during the financial year or any gains in subsequent years. Consult a tax professional for advice.

Pay your interest-in-advance

Interest-in-advance loans are similar to standard fixed-rate interest-only loans but you pre-pay the next year’s interest before 30 June and claim it as a tax deduction in the current year. This means that upon lodging a tax return, eligible investors can effectively receive a portion of their interest back via a tax refund. Keep in mind individual circumstances differ so it’s always clever to seek expert advice from your tax accountant and a mortgage broker.

For home loan tips, trends, facts, data and other information, visit MortgageChoice.com.au,

* Number of Australians who claimed rental property deductions in 2008-2009, according to the latest figures from the Australian Taxation Office.

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Nearly 11 years on since it was first introduced the federal grant for first-home owners still stands at $7000, even though the average house price has more than doubled in that time.

That’s led one leading mortgage broker to suggest it is time the scheme was upgraded.

The residential housing market had changed significantly since 2000 and the $7000 grant was no longer adequate, Loan Market said.

“The economics that drove the original payment are outdated and need to be reviewed as per any government grant,” said the broker’s chief operating officer Dean Rushton on Wednesday.

The First-Home Owners Grant (FHOG) was introduced by the Howard government to help offset the impact of the GST on home ownership.

“For the FHOG to continue to help buyers, it needs to reflect the conditions they face in 2011, not 2000,” Mr Rushton said.

Most recent Australian Bureau of Statistics (ABS) data shows the size of an average home loan taken out by a first-time buyers was $285,400.

Back in June 2000 it was just $137,400.

Mr Rushton said the $7000 grant had been effectively halved.

Other ABS data shows the proportion of first-home buyers taking out a loan in April was 15.8 per cent, slightly more than the near seven-year low of 14.9 per cent seen in February.

But this was still well shy of the record 28.5 per cent set in May 2009 when the Labor government temporarily increased the grant as part of its economic stimulus measures to fend off the global financial crisis.

At that time the grant was $14,000 for existing homes and $21,000 for newly-built homes.

Mr Rushton said first-time home buyers had dropped out of the market during the past 18 months due to a combination of cost-of-living pressures and higher interest rates.

They also face the challenge of paying high rents and saving for a deposit.

The federal government’s $1.2 billion First-Home Saver Accounts scheme, which was introduced in October 2008, had done little to encourage first-time buyers, Mr Rushton said.

“The scheme aimed to assist more than 700,000 people within the first four years but it has attracted nowhere near the amount of the interest anticipated,” Mr Rushton said.

While legislation was passed recently to improve the flexibility of the scheme, it still had a four-year qualifying period, which made it unattractive for many first-time buyers, he said.

Colin Brinsden, AAP Economics Correspondent www.domain.com.au

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Go behind the scenes of the fourth season of reality TV’s renovation show The Block.

It’s a cacophony of construction noise: drilling, sanding, sawing, banging. Trees are hurried along hallways, which are lined with drop cloths and paint tins.

Some rooms are furnished, others look a long way from done. There’s scaffolding and tarpaulins and tools. And there’s tension in the air.

There are 60 tradesmen on site and, it seems, almost as many camera crew.

Somewhere in the organised chaos are the four contestant couples, who have less than 48 hours now to finalise full renovations on the four houses that are part of the latest season of reality TV renovation show The Block.

By the time season four goes to air on Monday night, the four free-standing houses – two Victorians and two Edwardians on Cameron Street in Richmond – will be completely finished.

”The contestants only get two months to make over the whole house,” explains executive producer and co-creator of the series Julian Cress while on-site.

”So they have to, in eight weeks, make over three bedrooms, two bathrooms, hallway, living, dining, kitchen, backyard, front yard and facade, from scratch.”

Purchased at the end of November last year for ”about three and half mil” from a family who owned all four, they were, Mr Cress says, ”in an astonishing state of disrepair; they were like slums”.

The competing couples have been given a budget of $100,000 each to transform the properties.

”There was no heritage overlay here so anybody could have just demolished them and put up a block of flats. We didn’t want to do that. We were just really excited by the possibility of taking these four beautiful old homes and restoring them to their former glory and using them for the show. Because they were side by side, it was just the perfect opportunity,” he says.

Three are single-fronted and one is double-fronted. ”To create an even playing field, we decided to put a second storey addition on the single-fronted houses so they’d all be three bedrooms, two bathrooms,” Cress says.

The back of each house, which faces north, was demolished. Host Scott Cam and his building team created new framing and floors. The contestants have then had to build everything else themselves.

”They’re not just renovating rooms, they’re actually building houses this time,” Cress says of the show that first premiered in 2003 and previously featured contestants renovating apartments.

The houses will be sold, fully furnished, at auction at the end of the season, with that final episode being filmed then.

So as not to spoil the on-air reveal, the auctions will not be held on the street but in private, with interested buyers having to register to attend.

The winner of the series is then determined by whose house sells for the highest price. They will win whatever the difference is above the reserve they set plus an additional $100,000. Last year’s winners pocketed $305,000.

The Block screens every weeknight at 7pm on the Nine Network, from June 20.

Story by Joanne Brookfield www.domain.com.au

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A threat by the Coalition to overturn the Gillard government’s ban on bank mortgage exit fees has prompted an angry response from consumer group Choice.

The ban is due to take effect from July 1, but can still be reversed by a majority vote in federal Parliament.

The Coalition would need the votes of two crossbench senators to overturn the ban under the current numbers in the upper house.

But the task would be more difficult after July 1, when the Greens alone will hold the balance of power. The Greens have in the past strongly advocated a ban on exit fees.

Nationals Senator John Williams said he had always opposed exit fees as they stifled competition. He said the ban should apply only to larger lenders, and smaller lenders should remain free to charge the fees.

Under Senator Williams’s plan, the ban would apply to ”authorised deposit-taking institutions,” the larger lenders regulated by the Australian Prudential Regulation Authority, but would not cover smaller lenders which come under the remit of the Australian Securities and Investment Commission.

Independent Senator Nick Xenophon said he would support the Coalition move, as he believed a blanket ban on exit fees would disadvantage smaller lenders the most. ”If you adversely impact on the smaller lenders, it will hurt consumers, and the big four banks will be laughing all the way back to themselves,” he said. ”We need to go back to the drawing board.”

But Matt Levey, the head of campaigns for Choice said such arguments were misguided.

”Business models based around trapping consumers in uncompetitive deals through complex and costly fees have no place in a reformed banking sector,” Mr Levey said.

”This is no time to retreat from genuine reform,” he said.

”Removing exit fees will pressure lenders to compete on up-front price and customer service, or else face the risk of customers moving their money to get a better deal.”

Treasurer Wayne Swan said there was no justification for exit fees and hit out at shadow treasurer Joe Hockey.

”I am just gobsmacked that Mr Hockey and the Liberal Party could talk about bringing back unfair mortgage exit fees as high as $7000. I think it just shows it’s another cheap political stunt from the Liberal Party who are completely out of touch with the needs of bank customers.”

The fate of the ban will depend on how Family First Senator Steve Fielding and Greens senators vote. Neither Senator Fielding nor Greens banking spokesman Adam Bandt could be contacted yesterday.

Story by Dan Harrison www.domain.com.au

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Hopes by some mortgage brokers and non-bank lenders that the Government would not garner sufficient numbers in the Parliament to maintain a ban on mortgage exit fees appear to have been dashed, with the Australian Greens indicating their strong support.

The Greens’ only member in the House of Representatives and the party’s banking spokesman, Adam Bandt, said today the Greens would vote to keep in place the ban on mortgage exit fees due to come into force on 1 July.

Bandt said that while the Greens understood that mortgage brokers and some non-bank lenders were concerned about the ban, they had not mounted a convincing argument about why it should not remain in place.

“Consumer advocacy groups such as CHOICE, the credit unions and mutual societies and even the National Australia Bank have all said overturning this ban is not the way to go,” he said.

“Instead of focusing on exit fees, those advocating greater competition in the lending market should focus on how to get the cost of wholesale finance for smaller lenders down so they can compete with the big four banks instead of penalising consumers,” Bandt said.

He said the Greens would seek further reforms from the Government to improve non-bank lenders’ access to finance.

Story source: http://www.moneymanagement.com.au

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The central bank has again signalled that interest rates will increase “at some point” but says it will wait for more news on the state of the international economy and on Australia’s domestic demand.

The minutes of the Reserve Bank of Australia’s (RBA) June 7 board meeting, show the bank believes inflation is being moderated by a high Australian dollar and recent lowering labour costs.

But the bank warned that growth in the resources sector may cause a gradual pick-up in inflation.

“This outlook suggested that further tightening in monetary policy would be necessary at some point,” the minutes said.

“Members considered, however, that the flow of data over the past month had not added any urgency to the need for an adjustment to policy.”

While there had been additional evidence of the coming strong pick-up in investment in the resources sector, activity remained quite subdued in some other important parts of the economy, partly as a result of previous cash rate hikes and also due to the high exchange rate, the RBA said.

“Credit growth remained quite moderate and asset prices had softened.

“In addition, the global activity data had been somewhat softer and downside risks to the international economy had become a little more prominent over the past month, especially in the case of sovereign debt problems in Europe,” said the minutes.

The Bank said it would leave the cash rate unchanged and would wait for further data on international developments and on the strength of domestic demand and inflationary pressures.

The past month had brought further evidence of the expected strength in mining investment, the central bank said.

However, investment intentions were considerably weaker, with the capital expenditure survey suggesting a significant downward revision to planned spending and structures in 2011/12, the RBA said.

Households continued to be cautious in their borrowing and spending, it said.

“With household income growth strong in the March quarter and consumption increasing more moderately, the household saving ration was estimated to have risen.

“Members observed that the saving ratio was now back to levels seen in the mid 1980s and that the increase from earlier unsustainably low levels was a positive development.”

The RBA noted that the housing market had remained soft, consistent with ongoing consumer caution.

The central bank last increased the overnight cash rate in November 2010 to 4.75 per cent.

It has kept it unchanged since then, as it assesses whether the boost from the resources boom is outweighing the slowdown in much of the rest of the economy.

AAP

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Australian home owners are among the most indebted in the world, but most had no trouble meeting monthly repayments on their mortgage in the last year, new research shows.

A survey of home owners and aspiring first-home buyers in eight countries by mortgage insurance provider Genworth has shown one in five Australian home owners spend more than half of their after-tax income on debt repayments.

On average, 45 per cent of home owners’ after-tax income goes to paying off debts, well above the average of 38 per cent in the other countries surveyed – Canada, India, Ireland, Italy, Mexico, the United Kingdom and the United States.

‘‘Whether for financial or cultural reasons, Australians are the most relaxed about being highly leveraged, with one in three comfortable borrowing more than 80 per cent of their home’s value, the highest proportion of the eight countries surveyed,’’ Genworth Australia chief executive Ellie Comerford said in a statement.

Four out of five of the Australian homeowners interviewed said they had no trouble meeting their mortgage repayments in the last 12 months.

As well, 45 per cent overpaid on their repayments, well above the average of 26 per cent in the other surveyed markets.

The level of confidence in the domestic economy among Australians was also higher than the total survey average, with 37 per cent expressing confidence in Australia’s prospects, compared to 30 per cent in the remaining countries.

The research showed the average age of first home buyers in Australia was 28.6 as of March, and had increased at a faster rate than the average age in the other countries surveyed.

AAP

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In many new areas, power lines are going underground. But if you live in an older area, would you fork out for the privilege?

A paper released last year by the Crawford School of Economics and Government at the Australian National University found that underground power lines could increase a home’s value by 3 per cent. That doesn’t sound much, but on a $500,000 property, it equates to $15,000.

It’s not really an issue I’d considered until I moved house recently where a hedge had been inconveniently planted under some low-hanging power lines. After getting the tree trimmers in for a fairly decent sum, it occurred to me that in the long run, it would be easier to either rip out the hedge and plant something more appropriate, or get the power lines buried underground.

In many new areas, power lines are going underground. But if you live in an older area, would you fork out for the privilege?

A paper released last year by the Crawford School of Economics and Government at the Australian National University found that underground power lines could increase a home’s value by 3 per cent. That doesn’t sound much, but on a $500,000 property, it equates to $15,000.

It’s not really an issue I’d considered until I moved house recently where a hedge had been inconveniently planted under some low-hanging power lines. After getting the tree trimmers in for a fairly decent sum, it occurred to me that in the long run, it would be easier to either rip out the hedge and plant something more appropriate, or get the power lines buried underground.

Given how long hedges take to grow, it seems more sensible to opt for the underground option.

At the same time, the local council is planning to tear up the existing footpath and lay a new one, so I wondered, would it be possible to lay the power lines underground at the same time? That would reduce fears in storms of live wires coming down, and also cut down on the need to butcher street trees growing around power lines.

Many new areas now have everything underground, and it’s easy to see why councils are forcing developers to go down that path. Although overhead set ups are seven times cheaper to install than the sub-ground option, they are also a lot more susceptible to storm damage in high winds. Or even just a tree branch coming down in normal weather and taking out half a suburb’s power.

On the downside, as Energex found out in the recent Queensland downpour, underground wires don’t much like floods. “Underground cables are laid in pipes, in conduits, and they really act more as a funnel for flood waters,” a spokeswoman says.

If something goes wrong, it can take a lot longer to find and fix the fault. “You have to dig up the earth to be able to repair anything, so it’s go its inherent issues. It was definitely more difficult for us to restore power to those underground areas [during the floods],” the Energex spokeswoman says.

Perth has been putting existing power lines underground since 1996 and is somewhat of a world leader. About half of the city’s homes now have underground power, helped along by a policy for all new estates to have underground infrastructure, as happens in many other parts of Australia too.

The impetus was some terrible storms back in 1994 that brought power lines down and left many people without power for more than a week.

Tony Moore, a spokesman from energy supplier Western Power, says putting existing cables underground costs between $10,500 and $11,500 per home. In south-west Western Australia, local councils foot 50 per cent of that cost, while the power company and the state government each cough up one-quarter.

Western Power works on a per lot basis, but some of the lots are strata title, which means councils can collect one, two or more rates for that “lot”.

By the time councils take that into account, and sometimes inject a bit of extra funding, undergrounding existing wiring usually costs ratepayers about $4500 per property, Moore says.

Because the maintenance costs of underground power lines over their nominal 40-year life are about 20 per cent of their initial installation cost, that split makes it equitable for Western Power to support the project.

But if Western Power had to pay for all of the undergrounding costs, the return on investment wouldn’t make sense, Moore says.

“In Perth we’ve been able to build a program that has encouraged people to be accepting of the fact they’ve got to pay $4000 – $4500 to get underground power. But I can tell you that when they get it, they love it. They support it in droves,” Moore says.

Surveys at the end of each project show satisfaction levels in the high 80s to early 90s, which means people often change their attitude once they see what a difference the underground wires make.

“You might have done a survey during the project to see whether they’re prepared to pay for it or not and in some cases you don’t even get 50 per cent, so we can’t do a project,” Moore notes. “It’s never forced on people, it’s always given to them as an option but if they’re not prepared to pay the money then we won’t go ahead and put Western Power and government money into areas that are not prepared to support it.”

Nevertheless, the hope is that one day, all of Perth’s power will be underground.

“The reliability levels are markedly improved where we have converted them from overhead to underground,” says Moore.

The work is done through drilling, not trenching, so while there’s still a bit of mess, it doesn’t make the street look like Armageddon. And at the end there are no poles or lines visible.

Story by Carolyn Boyd www.domain.com.au

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The issue of the government’s ban on exit fees is one that has crept up unnoticed on the Australian public.

Some people have asked me, what the issue is and who cares?

Well, the issue is that banning exit fees in the mortgage market will reduce competition by making it very hard for the most competitive players – non-bank lenders – to stay relevant in the market.

That’s the real issue.

As for who cares, try this list: the Mortgage and Finance Association of Australia (MFAA), Aussie Home Loans, Australian First Mortgage, Smartline, Mortgage EZY, Loan Market, Mortgage Choice, AFG, National Mortgage Company and Better Mortgage Management.

We all signed-on to an advertising campaign this week, aimed asking the government to drop its exit fee ban, or to at least adhere to the recommendation of the Senate Economics committee’s inquiry into banking, and exempt non-bank lenders from the exit fee regulations.

The MFAA – an industry body of mortgage and finance brokers – represents 41 per cent of mortgages written each year in Australia through organisations such as those listed above.

The Senate Economics Committee released its report into banking last month and it made comments that all Australians should note: it called for the Australian Securities and Investments Commission (ASIC) exit fee guidelines to be evaluated before any bans were implemented or that small lenders should be exempted from the Federal government’s ban on mortgage exit fees. The ASIC guidelines had been released only three weeks before Mr Swan announced the ban.

There is yet to be a government response to the Senate Committee report, but it should be noted that allowing the ASIC guidelines to operate, or exempting non-bank lenders from the ban on exit fees, would both have the effect of promoting competition in mortgages by allowing non-bank lenders – the real competitive factor in mortgages – to operate in the best interest of consumers.

Source: http://exitfeesmeancompetition.com

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DO you renovate before you sell, or just shove it on the market? Unfortunately, the answer is not simple.

There are a few tasks that cost little or nothing that should be undertaken without question. The big clean, the touch-up of paintwork, storing the clutter and fixing anything obvious.

Tidy that yard and make sure everything looks good from the street. Straight away, you have a clean and tidy home to list, but what if you feel that is not enough?

Consistently, the two most saleable homes in any market booming or busting, or location urban, or 100km down an unsealed road are either the “renovator” or the “move-in”.

The renovator offers buyers a chance to secure a home at a low figure for the area, relish the challenge and love the deal.

The well-presented home, with great decor and fittings -  the home that has the ready-to-move into feel, where sometimes the price can be a little steep sees the seller do well.

However, so many homes just fit the “in-between” category.

So, your first point of reference should be to ask yourself if it is a genuine renovator?

If it is, unless you are going to do the lot, it probably is better to leave as is.

Tidy and do the essentials, of course, but recognise that this is an entry-level home that may even have buyers fighting over it.

Likewise, if you are that fastidious homeowner who knows how to present their home as a display home, yet retaining that “lived-in, yet-we-love-living-here-even-though-we-are-selling feel”, you need to do nothing other than make sure your price expectations are 2011 and you have a good agent on board.

For the rest of us, we need to estimate how much your home is worth now as it is, versus what could it be worth with improved presentation and updated fittings?

Ask yourself what that work will cost and will it be more than the value gain? Answering these questions should help you determine the answer.

Any substantial investment runs the risk of not gaining sufficient value increase to warrant the investment in time and money.

On Selling Houses Australia we often get viewers asking: “How did you do all that work for that?”

The truth is and this is the same for homeowners everywhere the more labour you can undertake, the more bargains you can buy to aid your makeover, the tighter the budget is maintained, the less risk there is to your over-capitalising.

In our show we get all hands on deck in a few days, but the free labour is usually working on jobs many of us can undertake ourselves. (Well, some of us. My family don’t let me do anything other than painting, or clearing up as they figure they only end up having to pay a professional to complete anything properly).

So, like most things in property, knowing how much you should or shouldn’t spend is all about research.

You need to know what your home is worth now and if real improvements add enough value to warrant the work. If so, set a budget and stick to it.

Remember, if you are renovating to sell, it’s a business decision – don’t renovate with your heart or personal taste in mind.

Finally, always avoid the half-done project if your home needs a new kitchen and bathroom, overhaul both to a decent standard.

Do not spend all the money on a fantastic kitchen alone.

It is about the whole picture and finding decorative short cuts.

Remember, with these sorts of renovations, think selling, not your personal desires.

* Andrew Winter is a real estate consumer champion and the host of Selling Houses Australia on Lifestyle Channel.

Source: http://www.perthnow.com.au

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Mortgage delinquencies in the north- eastern Australian state of Queensland have risen to the highest in more than three years as floods and higher interest rates pushed up arrears, Fitch Ratings said.

Some 2 percent of mortgages in Queensland were in arrears in the six months to March 31, compared with 1.54 percent six months earlier, the highest since the ratings company starting publishing the reports in November 2007, Fitch said in an e- mailed report. Across Australia, 1.76 percent of loan repayments were late by 30 days or more as of March 31, according to the data, which represents about 17 percent of mortgages in the country.

“The Queensland floods have partially contributed to the increase in arrears,” analysts led by James Zanesi, associate director at Fitch, wrote in the report. The variable performance is a reminder to investors in residential mortgage backed securities “that the geographic diversity of the portfolio is an important attribute to be considered.”

Queensland’s capital city Brisbane saw home prices fall 3.1 percent in the three months to April, compared with a national drop of 1.2 percent, according to figures from real estate researcher RP Data. Almost two months of flooding at the start of 2011 inundated about 40,000 homes in Brisbane.

Victoria was the best-performing state, with delinquencies at 1.34 percent, and New South Wales saw arrears rise to 1.93 percent, Fitch said. Arrears rose in all six Australian states.

To contact the reporter on this story: Nichola Saminather in Sydney on nsaminather1@bloomberg.net

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AUSTRALIAN institutional investors, worth hundreds of billions of dollars, are trailing their European counterparts in funding projects to tackle climate change because of delays getting a carbon price established.

In a global survey of 90 firms – owning and managing assets of $12 trillion – Australian respondents said they were eager to develop an approach to climate change in their investment decisions but the uncertainty around domestic policy was an impediment.

Chief executive of the Australian-based Investor Group on Climate Change (IGCC), Nathan Fabian, said yesterday that his members were ”actively preparing to invest [in climate projects]. But there is no doubt a lack of clarity over a carbon price is impeding investment.”

Of the total assets managed or owned by the firms surveyed for the report, on average 0.3 per cent were invested in climate change projects such as renewable energy and clean technologies. European firms led the way, investing 0.5 per cent of assets in climate change-related projects, with Australian firms following on 0.3 per cent and US firms lagging behind on 0.1 per cent.

The survey – conducted by three international climate change investor networks, including the IGCC – also found that Australian firms had a growing recognition of the physical impacts of climate change exacerbated by the recent droughts and flooding, especially in real estate and major infrastructure investments.

The investor report follows last week’s Productivity Commission review showing Australia falling behind Germany and Britain in investing in carbon abatement from the power sector, but roughly in line with China and the US.

A domestic carbon price is being negotiated between the government, Greens and independents, with more meetings between the groups expected this week.

The government will also hold a meeting with its business roundtable on climate change on Friday as it hammers out a compensation package for industry under a carbon tax.

The Gillard government will today release a snapshot of potential climate change impacts in Victoria.

The snapshot warns that climate change could drive days over 35 degrees in Melbourne from the current nine a year to up to 26 by 2070.

In Mildura, days over 35 degrees may increase from 32 days currently to 76.

The extra hot days could drive up heat-related deaths but would decrease deaths related to cold weather, more prevalent in Victoria.

Rising temperatures could also drive more days of high and extreme bushfire risks, the snapshot shows.

Story by Tom Arup www.theage.com.au

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The decision by the State Government to remove the stamp duty home concession will flatten the struggling Queensland residential property market and cost homebuyers thousands of dollars, according to the Real Estate Institute of Queensland (REIQ).

The government announced today that from 1 August the concession which non-first home buyers receive when buying a new or established home as their principal place of residence will be removed. For a median-priced house in Brisbane, homebuyers will now be hit with more than $15,000 in stamp duty – an increase of more than $7,000.

First home buyer stamp duty concessions will remain for homes up to $500,000.

The government also announced a $10,000 grant for new-home builds. The Queensland Building Boost grant will be available for all people building, or buying, a new-build home or unit priced up to $600,000 between 1 August 2011 and 31 January 2012.

REIQ chairman Pamela Bennett said while any incentive to increase housing supply and create jobs in the construction sector is a positive for the economy, the removal of the stamp duty concession for non-first home buyers will wreak havoc on the Queensland property market.

About 60 per cent of all dwellings financed in Queensland in April were to non-first home buyers.
“The market is already the lowest it has been in many years and today’s announcement will just make it worse,” she said.

“The government is obviously trying to fill the financial void that has been left by the weak property market, and the subsequent lower stamp duty receipts given the marked reduction in property sales over the past 18 months.

“A better way to stimulate the economy would have been to provide financial incentives for all buyers of all types of properties which in turn would have increased activity and therefore helped the government’s bottom-line.”

According to the REIQ, the $10,000 grant for new-builds might provide a much-needed shot in the arm for the building sector but its value will be greatly diminished by the increased rates of stamp duty that non-first home buyers will have to pay. It is also unlikely to assist more first home buyers into the market.

“There has been a huge reduction in first home buyer activity over the past year and this grant is unlikely to change that state of affairs to any significant degree,” she said.

“While the grant means first-timers will be able to access $17,000, as well as stamp duty concessions, purchasing a new-build home or unit continues to be out of the financial reach of most prospective homeowners.”

When the First Home Owners Boost was available in late 2008 and throughout 2009, 74 per cent of first home buyers purchased an established home despite $21,000 being available for constructing a new home or the purchase of a new-build.

A new report debunks scare campaigns that Australia is going alone on climate change and backs the government’s ETS plan, Treasurer Wayne Swan says.

The Productivity Commission report puts Australia in the middle of the pack in terms of nations tackling climate change, putting paid to criticism that the Gillard government is going it alone.

The report does not suggest a starting price for carbon, saying it’s too hard to calculate a comparable figure in other countries.

But it notes 12.5 million tonnes of carbon abatement in Australia’s electricity sector last year at a cost of up to $99 a tonne could have been achieved for just $9 a tonne if there had been a price on pollution.

Treasurer Wayne Swan seized on the report as supporting the government’s plan to put a price on carbon from July 2012, followed by an ETS within three to five years.

The Productivity Commission report said various countries had around 1000 different measures in place to cut carbon pollution.

But popular methods such as direct subsidies for solar cells and tax cuts for biofuels were very expensive and produced little carbon abatement, it said.

‘An explicit carbon price applied broadly to the economy would achieve abatement in most likely much more cost-effective ways’ than other methods, the report concluded.

It compared Australia with the UK, US, Germany, China, Japan, South Korea and New Zealand and found Australia currently ranked in the middle in terms of tackling climate change.

The report will be used in talks on carbon pricing involving Labor, the Greens and independents which are expected to be finalised by early July.

It said that a number of countries were shifting from subsidies to emissions trading schemes – including Australia’s largest trading partner China.

‘The report completely debunks any scare campaigns suggesting Australia is acting alone and provides more evidence that putting a price on carbon pollution is the best way to cut pollution and protect our economy,’ Mr Swan told reporters in Brisbane.

Subsidies for solar cells equated to an effective carbon price of up to $864 per tonne, and tax exemptions for cleaner biofuels equated to around $310 a tonne.

Mr Swan said this showed ‘direct action’ policies such as that advocated by Opposition Leader Tony Abbott would ‘blow the budget’.

Greens deputy leader Christine Milne, who is on the multi-party committee working on the ETS, said the report showed Australia would not be moving ahead of the world by putting a price on carbon from 2012.

But she said it needed to be coupled with much greater investment in renewable energy.

Independent MP Tony Windsor, who is also on the committee, said the report answered the two questions he had about carbon pricing: is the rest of the world acting, and is it the most efficient method?

‘In the studied countries, the answer is they are doing something,’ Mr Windsor told AAP.

‘And if we are going to do it, the cost-effective way of achieving something is through a pricing mechanism.’

Mr Abbott said Australia would kick an ‘economic own goal’ with an ETS.

‘It won’t clean up the environment, it will clean out your wallet and it will wipe out jobs big-time, particularly in the coal industry,’ he told reporters on a visit to the Illawarra industrial region in southern NSW.

Minerals Council chief Mitch Hooke told a Senate hearing in Canberra a carbon tax would be like taking a ‘baseball bat to the Australian economy’, unless trading partners were taking part in a global ETS.

Source: www.bigpond.com

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When downsizing you’ll lose space, but there’s no need to cut back on comfort or style in your new home.

Move My Home asked three experts in decor, design and decluttering for their best advice when moving to smaller living quarters.

Di McKenzie of Interiors Intoto in Mosman believes it’s vital to be aware of the emotional aspects of the downsizing experience.

It’s one thing to see your existing space all boxed up, but it’s another to move into a new home and have that feeling of confusion when you have to start again, particularly with the elderly.”

Di’s clients include empty-nesters, people moving from a house to an apartment and older people moving into a retirement village.

“It’s important to deal with the person who’s downsizing – not their family members. They know what’s important to them and they’ll identify what they’d like to take. A move is always emotional because people become attached to their environment, no matter the age, and they’ve all got precious belongings.

The elderly tend to keep treasured items such as wedding presents or items bought on holidays because it reminds them of happy times.

“It can be devastating moving from a 4 or 5 bedroom house to an apartment, and it’s coming up more and more with the wave of baby boomers. Boxing up their kids’ bedrooms can be very emotional.

They can’t let go of trophies the kids won when they were six. Those things are sometimes more important to parents than to the kids who are now 25 and on their grand world tour – they’re not concerned about their bedrooms.”

Moves triggered by family breakup can be particularly painful, but Di thinks friends and family can help ease the transition.

“Where people decide they can’t live together any longer and are moving to separate homes, it’s important that they walk into a space that has some homely touch – a bowl of fruit or some beer for a bloke – something that will make him pause and take in his new space and realise that this is a new beginning, and that there’s a touch of humanity there already.

These are all things that people who care about them can help with.”

Di advises movers to check available space at their new place before moving belongings.

“That seem pretty logical, but often people are in a hurry, and they just take everything and plan to sort it out later. If moving to an apartment, you won’t have additional storage space, so you must be very sure that what you’re taking fits or you’ll have nowhere to put it.

Without proper planning it can be a disaster for the customer and the removalists, who may have nowhere to put it all if there’s no storage room; and that starts you off on the wrong foot in your new home.”

Kerri Rodley of Domestic Downsizing in Norman Park Queensland encourages clients on the move to consider which items are important, useful or beautiful in their home.

“When it comes to downsizing, you must be very aware of what your goal is – to get rid of your stuff to create more space,” Kerri says.

“The main questions I ask when helping clients to make decisions about their items are: do you love it? Is it useful? Do you really need it? If you can’t answer yes to one of these questions it’s time to let it go.

“I find that where people haven’t moved for many years, they haven’t really looked at their stuff for a long time. But when moving into a smaller space, you really need to do that. Walk around the house and put a sticker on the things you really love, things that give you joy when you look at them – that make a difference in your life.”

Kerri has a creative solution where clients can’t bear to part with items they don’t need or want, because they have sentimental value.

“Let’s say you’re holding on to jumpers you don’t wear because your mother knitted them for you. Are you honouring her memory by keeping stuff you don’t like? Either pass them on to someone who will love them, or have things made into other things that you will appreciate.

“You could take a set of photos of the jumpers – close-ups highlighting a detail of the pattern or texture in each. Put them in a triptych frame and you’ll have a lovely artwork – a series of different but similar things. That way you’ll keep the feel of the jumpers, and of the craftsmanship. One picture of a jumper takes up a lot less room than 10 jumpers.”

Kerri offers these additional tips for organising your new environment

Measure your furniture to see if it’ll fit into your new space – particularly large items such as sofas and beds.Take the room measurements of your new space or check the floor plan. Don’t forget about the location of doors and windows – a factor in furniture placement.

Assess how much of the new space is dedicated to storage to see how much you need to dispose of before moving. Don’t forget hidden storage areas you currently use in your old place.

Melbourne interior design consultant and fashion buyer, Mimi Marti, has first-hand experience of downsizing. Mimi and husband Hans moved to a new apartment from a beautiful period home in Richmond.

“We’d lived in a double-storey Victorian home for 18 years, and now we live in a modern apartment with superb views over Albert Park,” Mimi says, “It was a difficult choice to make, because we moved from a 35-square home to a 15-square home.

I often pass the house, but now have no feelings for it. And we still have a garden. We have a five and a half acre property in the country, which fulfils our space requirement.”

As a collector of art and antiques, Mimi had the difficult task of deciding what to take with her and what to leave behind.

“We sold most of our stuff to neighbours who were moving to a larger home, and the rest at auction. Antiques are very hard to sell at auction, but you take the losses and make a new start.

“We had a couple of favourite pieces – one a 19th century French hand-painted armoire. I fell in love with it and Hans had it delivered as a surprise birthday present many years ago.

There was also a beautiful, antique gilt-framed mirror which I felt I needed to find place for, so I designed a hall table to go under it. I designed all the furniture for the apartment and had it custom-made.”

Many of Mimi’s clients have downsized and she knows how to make small living spaces inviting.

“Look at the sizes of the rooms. In a modern apartment there’s often a wall of windows so you don’t feel confined. It’s that idea of the outside coming indoors that creates a sense of space,” she says, “If it’s a small area, stay with neutral colours and use accent colours.

If selecting carpet, don’t go for very dark colours and keep the walls light. Often people make the mistake of choosing dark furniture. You can always add colour with other things.

“You can also change the look of a room without great cost by using brighter colours in summer and darker colours in winter, by moving your paintings around, and by adding coloured glass pieces and fresh flowers.”

Story by Mary Costello www.domain.com.au

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