Financial Year Insights for Property Buyers and Investors

July Financial Year Insights

At Manage Your Loans, we are committed to providing the insights, resources, and tools necessary to help you navigate the property market with confidence. As of July 1, several significant changes will impact property buyers, owners, and investors.

Here are four key developments you should be aware of:

1. Tax Cuts Set to Boost Borrowing Capacities

This financial year marks the commencement of the Stage 3 tax cuts, which will enhance borrowing capacities for many Australians. These cuts result in reduced tax rates across various income brackets:

• For incomes between $18,201 and $45,000, the tax rate drops from 19% to 16%.

• For incomes between $45,001 and $135,000, the rate decreases from 32.5% to 30%.

• Higher-income earners will see adjustments, with the 37% tax rate threshold rising to $135,000 and the 45% rate applying to incomes over $190,000.

These changes will increase take-home pay, potentially boosting borrowing capacities by tens of thousands of dollars, thereby making home ownership more accessible.

2. ATO Crackdown on Landlords’ Dodgy Returns

The Australian Taxation Office (ATO) has issued a stern warning to property investors regarding incorrect tax deduction claims. The ATO estimates that erroneous claims, particularly those related to interest and expenses, could be costing the government around $1.2 billion annually.

Common mistakes include:
• Claiming interest on money used for personal expenses, such as cars or holidays.
• Incorrectly reporting repair and maintenance costs.

For instance, if an investor borrows additional funds against a rental property for personal use, only the interest on the original loan amount can be claimed. Additionally, repairs can be claimed immediately, but capital items like appliances costing over $300 must be depreciated over time.

3. First Home Guarantee Extension

The First Home Guarantee scheme, which allows eligible first home buyers to purchase a home with as little as a 5% deposit without paying lender’s mortgage insurance (LMI), will continue into the 2024-25 financial year with 50,000 new places.

Eligibility criteria include:
• Single applicants must earn less than $125,000
• Joint applicants must earn less than $200,000
• A deposit between 5% and 20% is required

The federal government guarantees up to 15% of the property’s value, helping buyers avoid LMI and easing the path to home ownership.

4. Buying Boost: A New Path to Home Ownership

Buying Boost is an equity investment that enables you to purchase a better first home sooner. As a buyer, you receive funds coupled with buying expertise to help you buy the right home, in return for a portion of your home’s future appreciation.

You can add up to 50% to your savings (up to $300K) to open more home options in exchange for a portion of your equity. This increase in your budget allows you to explore better home choices that align with your needs and desires.

No interest, fees, or monthly payments. You can sell your home or buy back our investment at any time, providing flexibility and peace of mind as you navigate home ownership.

We invest alongside you and only profit if you do. If your home appreciates in value, we share in the gain, ensuring that our interests are aligned with yours.

Why Choose Manage Your Loans?

Manage Your Loans distinguishes itself by coaching clients to find and implement solutions tailored to their unique financial situations. Our dedication to client success is what sets us apart from our competitors.