With a 57% clearance rate touted by the Real Estate Institute of Victoria, I think investors are looking forward to the end of the financial year. Most “mum and dad” investors who have a negatively geared investment property, that pay normal PAYG tax each week will be rushing to get their tax returns in as quickly as possible.
For those who have not adjusted the PAYG amount they pay each week in their wages, there is usually a nice little bonus at tax return time. Each month they have been receiving rent and paying the mortgage on their investment property as well as the rates, insurance, owner’s corporation fees and any sundry expenses, such as gardening, general maintenance and Land Tax. Usually they pay out more than they get in. Hence this is why it is termed “negative gearing”. But here is the pay off. The difference between what you bring in and what you have paid out is taxable. If you have received more income than expenditure, it is deemed taxable income. If you have paid out more than you have brought in then this amount is deducted from your taxable income. This will now come back to you as an income tax refund.
Whilst investors are getting ready for end of year, owner occupiers are looking for the right property. Again we saw over the weekend that a vendor happy to meet the market will end up with a good price, some vendors still see that their properties should have attained 10% plus growth per annum. “WRONG!!” It simply is not going to nor has it really ever happened. Over any given decade, you can see average growth in good suburbs of 8% – 10%. This means that in the good times like 2007 – 2010 we can see healthy growth rates of 10% – 12%, but this also means that sometimes we see negligible or negative growth to make the averages work.
We are truly in a negotiators market. Vendors are going to continue to ask the world. Selling agents will continue to tell vendors that “anything is possible” and most buyers are asking for ridiculously low prices! Deals are being missed by both vendors and purchasers that really should be done.
If you are looking at purchasing a property you need to get assistance. Even bidding at auction does not come down to “deepest pockets wins” there are ways to influence other potential buyers. And if the property passes and you are negotiating the property yourself, then you have a “fool for a client” No intelligent solicitor ever represents themselves in court.
Many people have asked why I should pay a fee to a buyer advocate when I could simply add that to my offer making it better. That same argument applies to anyone that is selling property. Yet nearly everyone pays an agent to sell for them. On a $500,000 property the difference in outcome from a professional negotiator to a novice can easily be $20,000: Much less than you are likely to pay for the services of a professional negotiator. When the price of the property moves into the $1M mark and above, the savings can be substantially higher.
If you are thinking about buying a property this weekend, why don’t you give us a call for a no obligation chat?
Ian James
Director
JPP Buyer Advocates