Salary Packaging - Attention NSW Health Employees!
Saturday, December 23, 2006
What is Salary Packaging?
Salary Packaging is a tax effecive way for employees to pay for expenses including mortgage repayments, novated car leases and rent payments.
Under a Salary Packaging agreement, employees can pay for the above from their pre tax dollars, rather than after tax dollars – which can reduce the amount of tax they pay each year.
Fringe benefits Tax
The payoff with Salary Packaging is that you may need to pay for FBT (fringe Benefits tax). Some items are FBT exempt such as laptop computers and car parking, whilst other items have a maximum benefit before they attract FBT.
For an example of how Salary Packaging can benefit you follow this link
http://www.ato.gov.au/individuals/content.asp?doc=/content/24632.htm&page=12&H12
If your employer offers a Salary Packaging scheme, we recommend you first seek advice from a skilled accountant. If you don’t know of a good accountant email us and we will recommend one for you.
posted by Daniel Serratore @ 11:10 am,
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Make sure you Plan!
Saturday, December 16, 2006
Strategy is Important!
If you are a property investor, it is important that your lending structure is well thought out.
Mortgage Insurance or LMI applies to most loans with less than a 20% deposit. The trouble with mortgage insured loans though is that they will only allow a certain amount of ‘exposure’ to each borrower. The amound depends on the insurer, and the borrower.
Let’s say you have two properties, both with loans that use the same mortgage insurer. If you are looking at another property, that Mortgage Insurer may not lend you any more regarless of whether you service for the loan - because you are 'over exposed'.
There are two main main Mortgage Insurers in Australia – GE and PMI. You will then need to choose a lender that uses a different insurer.
By developing a lending strategy from the outset, you can avoid overexposure with lenders and ensure that your future borrowing will not be hampered in any way. To do this effectively, it is essential that you use a Mortgage/Finance Broker that has access to several lenders and is aware of which mortgage insurers they use.
posted by Daniel Serratore @ 11:01 pm,
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Insurance Insurance!
Clients often ask me which insurance is necessary once they purchase a property.
You can insure almost anything these days, although property owners should consider the following:
Home Building Insurance:
This covers your home in the event of loss. If it is damaged beyond repair this insurance will cover the rebuilding of the house to the amount covered, and will often also cover the expenses of living in temporary accommodation .
Home Building Insurance will cover the replacement of some parts of your house that are damaged, eg. Broken glass, doors etc
It usually also covers you up to a certain amount if someone injures themselves in your property.
Home Building Insurance is a condition of any home loan. Lenders request a copy of the insurance before settlement
Home Contents Insurance:
As suggested, this covers the contents of your home should they be damaged or stolen.
Contents include all items that are not a fixed part of your building. There are usually two options:
General Contents Insurance. Here a total amount is covered, without nominating specific items. Be sure to determine the maximum replacement value of each type of item under this insurance. Eg. Maximum for jewellery, paintings etc
Specific Contents Insurance. This will cover specific items that you nominate to their agreed value
Ensure you choose an insurer with ‘new for old’ replacement – meaning that they will replace what you lost with a new replacement. This type of insurance is not required by lenders.
Landlord Insurance
Depending on the insurer, this insurance can vary.
If your property is rented out, it can cover:
- Both the building and contents
- Rent if your tenant suddenly leaves or doesn’t pay
- Injuries that occur on your property
- Loss of rent if your property is damaged
- Damage caused by your tenant
Strata Title Insurance
If you own a unit or a property under strata title, the building is generally insured by the body corporate. Strata Title insurance covers you for damage to your property that is not covered by the body corporate, like broken shower screens and windows.
It can also cover your rent if the tenant doesn’t pay or damages your property,
When deciding on a policy ensure to check what types of damage the policy will cover eg. Fire, flood, hail, robbery etc
Income Protection
This insurance will pay you a portion of your salary in the event that you injure yourself or become sick and are no longer able to work. The length of cover depends on the term of the contract. This type of insurance is generally suited to singles that require steady income to cover their commitments, but don’t necessarily have many people to support should they pass away.
Life Insurance
This is a lump sum payment that is paid to your beneficiary in the event of your death. Life insurance usually covers income protection also.
What do we recommend?
As a minimum, your home will need to have building insurance. (If you own a property under strata title, it is insured by the body corporate)
We also recommend contents insurance to cover your possessions. This insurance is usually cost effective.
It is also important to assess how you would cope if you were suddenly unable to work. Could you meet your commitments? If not, Income Protection is advisable.
Likewise, if you have a family, we recommend you also explore the benefits of Life Insurance
Who do I use?
This depends on what insurance you are looking for! We recommend you contact a trustworthy Insurance Broker that can compare different insurers with you. If you would like us to recommend you an Insurance Broker, please contact us via the email link at the top of this page.
posted by Daniel Serratore @ 10:14 pm,
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Buy Your First Home with only $4000
With the invent of the Stamp Duty concession, $7000 first home buyers grant and highly geared loans, first home buyers are now able to step into the property market with very little deposit.
Here is an breakdown of the deposit needed for a first home buyer to purchase an owner occupied $300 000 property, with a 3% deposit.
Costs:
Stamp Duty $0
Mortgage Duty $0
Application fee $0
Mortgage Insurance $6023 (added to loan)
Legals + Inspections $2000 (approx)
Total Costs Needed upfront: $2000
Plus: 3% deposit $9000
Total Needed: $11 000
Minus: $7000 First Home Buyers Grant
Total Needed Upfront = $4000
Loan Product
This type of loan structure requires a facility that allows a 97% lend with the ability to add mortgage insurance onto the loan. There are quite a few lenders that offer this type of loan, some with low fees and interest rates.
As a first home buyer, genuine savings is not required with most of these loans.
posted by Daniel Serratore @ 4:49 pm,
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First Home Buyers Entitlements
Thanks to the Government, first home buyers in NSW are entitled to two incentives for buying their first home:
1. First Home Owners Grant Scheme
If you are buying your first property which you will live in it for a minimum 6 month period (and move into within 12 months of purchase), you are entitled to a lump sum $7000 payment from the Government.
This money can be made available at settlement (which will reduce your other costs by $7000) or you can claim it after settlement from the Office of State Revenue. A good Mortgage Broker can help you do this
2. First Home Plus Scheme
In addition to the $7000, if you are moving into the property (same conditions as above), you will also have the Stamp duty and Mortgage duty waived for any residential property purchase up to $500 000. For properties over $500 000, here are the discounts:
Property Price---Stamp Duty-----Saving
$500,000.00 ----- $0.00 ------------ $17,990.00
$510,000.00 ----- $4,498.00 -------- $16,191.00
$520,000.00 ----- $6,747.00 -------- $14,392.00
$530,000.00 ----- $6,747.00 -------- $12,593.00
$540,000.00 ----- $8,996.00 -------- $10,794.00
$550,000.00 ----- $11,245.00 ------- $8,995.00
$560,000.00 ----- $13,494.00 ------- $7,196.00
$570,000.00 ----- $15,743.00 ------- $5,397.00
$580,000.00 ----- $17,992.00 ------- $3,598.00
$590,000.00 ----- $20,241.00 ------- $1,799.00
$600,000.00 ----- $22,490.00 ------- $0.00
(excuse the lines, couldn't work out how to paste an excel table!)
If you are buying vacant land the exemption is for land up to $300 000, then there are discounts between $300 000 and $450 000
For more info go to http://www.osr.nsw.gov.au/pls/portal/docs/
page/downloads/other/fhb_factsheet.pdf
How to Apply
First Home Owners Grant Scheme
The easiest way is to make the application with the broker or lender that is organising your finance. This means the money will be made available at settlement. The broker/lender should have a form for you to fill out otherwise you can get it at http://www.osr.nsw.gov.au/portal/page?_pageid=33,63384&_dad=portal&_schema=OSRPTLT
If you need to claim the grant after settlement, you can do so via the Office of State Revenue. Their number is 1300 130 624 or http://www.osr.nsw.gov.au
First Home Plus Scheme
The easiest way to organise this is through your solicitor, before settlement. When you first approach your solicitor or legal representative about your property purchase, advise them you are a first home buyer and you need to apply for the First Home Plus exemption.
posted by Daniel Serratore @ 4:13 pm,
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The Author
Daniel Serratore
Daniel is heading up the new generation of Finance Brokers in Sydney. With his fresh approach and "can do" attitude, Daniel has developed relationships with key people within the Sydney lending market which enables him to source great deals for his clients. Daniel is big on customer service and has built his business purely by referrals from clients and other businesses. You can catch him via the email link on the top of this page
About This Blog
This blog was developed as a resource for our clients and the general public. Although the internet will provide you with many lending providers, I am still to find a resource that shares ideas, tips and general useful info to assist borrowers make the right decisions. Hence this blog was born!
Contact Us
We have included a "Ask the Guru" link in the sidebar. If you have any lending question, regardless of how silly it may seem - send it to us and we will provide you with answers! Likewise, If you have any feedback on the blog, please let us know via the 'Contact Us' link on the bottom of this page.
