Investors – receive $228,844 in TAX FREE Government incentives!

Sound too good to be true? Read on to learn more about this amazing offer…

In 2008, a joint initiative between the Australian, State and Territory Governments established the National Rental Affordability Scheme (NRAS). The scheme offers valuable incentives to investors who provide affordable rental accommodation to moderate income earners such as teachers, nurses, police, fire-fighters and retail-sector workers.

NRAS is NOT a public housing program or social welfare scheme and merely seeks to address the shortage of affordable rental housing available to hard-working ‘middle Australia.’ Eligible single tenants may earn up to $44,835 p.a; couples up to $61,985 p.a; and a couple with 3 children up to $106,598 p.a. Tenant income limits are revised and increased on 1st May each year.

In return for investors agreeing to rent their properties at least 20% below market rates, they receive very generous cash and tax incentives. The NRAS incentives for 2012/2013 comprise:

1. Australian Government contribution of $7,486 per dwelling (as a refundable tax offset or payment); AND

2. State or Territory Government contribution of $2,495 per dwelling (in direct or in-kind financial support). In Queensland this is paid as a cash payment.

This equates to TAX FREE income of $9,981 per dwelling and the incentive amounts increase on 1st May each year in line with the rental component of the consumer price index. Over the past four years, increases have averaged 5.7% p.a. Assuming CPI increases of just 3% p.a, investors would receive the equivalent of $114,422 per dwelling over the 10 year period of the scheme.

However, it gets even better… if you buy the right type of approved property (e.g. dual-key units), you can double these incentives to more than $20,000 every year for the next decade. THAT’S A MASSIVE $228,844… AND IT’S ALL TAX FREE!!

This effectively means that for each dollar that you discount the rent, you receive at least two dollars of non-taxable income from the government!

This is in addition to all the usual financial benefits available to property investors, such as tax deductions on interest payments and depreciation on furnishings, fixtures & fittings and the construction cost of the property. Depreciation on a typical 2 bedroom apartment could average over $7,000 every year for 40 years.

Under NRAS, many investors find their property is cashflow positive… in other words, not only does it cost them nothing to own it, they actually make a profit of up to $13,000 or more each year! This makes it viable for some investors to buy several properties… a feat which would be difficult or impossible using traditional ‘negative gearing’ strategies.

While ‘negative gearing’ can offer good tax benefits, having negative cashflow means that investors have to pay interest and expense shortfalls out of their own pocket. It also limits their ability to borrow more money to buy additional properties. These are major reasons why few investors are able to build a substantial property portfolio. (According to the ATO, 73% of investors own just one property).

In stark contrast, if each of your properties is producing strong positive cashflow, it may be possible to accumulate 3 – 5 properties during your working life to fund a very comfortable retirement.

Properties can be purchased in your own name, or via a company or self-managed superannuation fund.

Banks will generally lend 80-87% of the value of NRAS properties.

NRAS approved dwellings are very rare… less than 1% of new investment properties qualify for NRAS incentives and with most of these properties already allocated, opportunities for investors are quickly diminishing.

To learn more about NRAS, click on this link to the Australian Government’s website:

NOTE: Returns will vary depending on your personal circumstances. Always seek independent financial, legal and taxation advice before making any investment decision.

© Brian White – This article courtesy of The article may be reproduced provided the above courtesy notice and author name remain intact.