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Jun 19, 2024

Tax Deductions for Homeowners

As we approach the end of the financial year, it's crucial for homeowners to be aware of the various tax deductions available that can significantly reduce your taxable income and save you money. At Noble Avenue Real Estate, we're here to help you navigate these potential savings and ensure you get the most out of your tax return. Here's a detailed look at some key deductions homeowners should consider. Home Office Expenses With the rise of remote work, many homeowners are utilising a portion of their homes as office space. If you work from home, you may be eligible to claim a portion of your home expenses. This can include: Electricity and heating costs: Calculate the percentage of your home used for work to claim a portion of these bills. Internet and phone bills: Proportionally claim the part of these expenses that relates to your work usage. Office supplies and equipment: Items like computers, printers, and office furniture can also be deducted. Example: If you have a dedicated home office in your $1.5 million property that takes up 10% of your home’s floor space, you might be able to claim 10% of your utility bills as a deduction. For instance, if your annual utility costs are $5,000, you could claim $500 as a deduction. More details can be found on the ATO website. Property Taxes Property taxes are often deductible, providing some relief on your annual tax bill. Ensure you have records of the property taxes you've paid over the year, as these can be included in your tax return. Example: On a $2 million property, if you pay $8,000 in property taxes annually, this amount can be deducted, reducing your taxable income. Mortgage Interest Interest paid on your mortgage can be one of the most significant deductions for homeowners. This deduction reduces your taxable income by the amount of interest paid, which can be substantial over the course of a year. Example: If you have a mortgage on a $1.8 million home and paid $50,000 in mortgage interest over the year, this amount can be deducted from your taxable income, potentially saving you thousands of dollars in taxes. Renovations and Repairs Expenses for necessary repairs and maintenance to your property can be claimed. This is particularly beneficial for investment properties. Common deductible expenses include: Repairing a leaky roof Fixing plumbing issues Replacing broken windows Example: If you spent $10,000 on essential repairs to your $1.2 million rental property, this amount can be deducted, lowering your overall taxable income. Depreciation For rental properties, depreciation on the property itself and items like appliances and furniture can be claimed. Depreciation accounts for the wear and tear on these assets over time. Example: If your rental property includes appliances worth $20,000, you can claim a portion of their value as depreciation each year, spreading the cost over several years. On a $1.5 million property, this can add up to significant savings over time. Insurance Premiums Premiums for home insurance can often be claimed as a tax deduction. This includes insurance for both the structure of your home and its contents. Example: If you pay $3,000 annually for insurance on your $2 million home, this amount can be deducted from your taxable income. Energy-Efficient Upgrades Investing in energy-efficient upgrades like solar panels or energy-efficient windows might make you eligible for additional deductions or rebates. Governments often provide incentives to encourage homeowners to reduce their carbon footprint. Example: If you installed solar panels costing $30,000 on your $1.5 million home and there's a government rebate of 30%, you could potentially claim $9,000 as a tax deduction. Practical Steps to Maximise Your Deductions Keep Detailed Records: Maintain receipts and documentation for all expenses. Consult a Tax Professional: For personalised advice and to ensure you're maximising your deductions correctly. Stay Informed: Tax laws change frequently, so staying updated can help you take advantage of new deductions and credits. Conclusion Understanding and utilising these tax deductions can lead to significant savings for homeowners. At Noble Avenue Real Estate, we are committed to helping our clients navigate the complexities of homeownership, including making the most of tax deductions. By following these guidelines and seeking professional advice, you can ensure that you're maximising your tax deductions and keeping more money in your pocket.

Jun 11, 2024

Navigating Settlement Day

Settlement day is a whirlwind of emotions—anticipation and excitement. With the right preparation, it can be a smooth and memorable milestone in your homeownership journey. What is Settlement? Settlement day is the grand finale of the property purchase process. It’s when the legal ownership of a property transfers from the seller (vendor) to the Buyer. Typically occurring six weeks after signing the contracts, this day is when the sale funds are transferred and the buyer officially becomes the new owner of the property. Vendor's Payment: The seller receives their payment from their settlement agent through a trust account. Buyer's Responsibilities: The buyer gets the keys and immediately takes on all responsibilities related to property maintenance, insurance, and utilities, regardless of whether they move in right away or rent out the property. What Happens on Settlement Day? Behind the scenes on settlement day, a lot of critical activities take place, orchestrated by the buyer's lender and the conveyancers or solicitors. Loan Draw Down: The buyer's lender debits the approved loan amount. Payment of Fees: The buyer pays all remaining fees, including legal fees, transfer duty, and Lenders’ Mortgage Insurance (LMI). Conveyancers' Role: The buyer's and vendor's conveyancers coordinate the transfer of funds, document signing, and final financial adjustments like council rates and utilities. Transfer of Title: Once payments are confirmed, the property’s title deeds are transferred from the vendor to the buyer, and this is officially recorded with the titles office. Key Handover: Once the property has officially settled, key handover can take place. (If the property is the seller's main place of residence, they legally have until 12pm the day after settlement to vacate the home How to Prepare for Settlement Day To turn settlement day into a celebration rather than a stress fest, here are some essential steps: Final Inspection: Conduct a final property inspection as close to settlement day as possible to ensure everything is in order. Transfer Funds: Arrange to transfer final funds well in advance, as financial transfers can take several days. Paperwork: Make sure all legal and mortgage paperwork is signed and approved. Simultaneous Settlement: If you’re selling and buying simultaneously, aim for simultaneous settlement to avoid the need for expensive bridging finance or temporary accommodation. Additionally, if the seller is still residing in the property, they have until 12pm the following day to move out. Utility Connections: It is the buyer's responsibility to arrange for utility connections with their chosen providers. Ensure all utilities are set up and ready to go for your move-in date, as this helps avoid any disruption of essential services. Final Thoughts Preparation and a clear understanding of the settlement process can make settlement day a smooth and exciting transition. At Noble Avenue Real Estate, we are dedicated to guiding you through every step of your real estate journey. Our local real estate agents provide personalized advice and support to ensure your settlement day is seamless and enjoyable. We specialise in Hillarys real estate, Carine real estate, Burns Beach real estate and surrounding suburbs, offering unparalleled local knowledge and expertise. For more information on our real estate services reach out today and let us help you make your homeownership dreams a reality. (08) 9307 1280 admin@nobleavenue.com.au Office located at: 2/46 Angove Drive, Hillarys

Jun 1, 2024

Understanding Capital Gains Tax (CGT) for Homeowners

As we step into June, it's a great time for homeowners to get ahead on understanding Capital Gains Tax (CGT), especially if you’re considering selling your property in the next financial year. Here’s a straightforward guide to how CGT works for property sales, including any exemptions or concessions that may apply. What is Capital Gains Tax (CGT)? CGT is a tax you pay on the profit (capital gain) made from selling an asset, such as an investment property. The gain is the difference between what it cost you to acquire the property and what you received when you sold it. How CGT is Calculated: Determine the Cost Base: This includes the purchase price, stamp duty, legal fees, and any other costs associated with buying and improving the property. Calculate the Capital Proceeds: This is the amount you receive from the sale of the property. Subtract the Cost Base from the Capital Proceeds: The result is your capital gain or loss. CGT Discount: If you’ve held the property for more than 12 months, you may be eligible for a 50% discount on the capital gain. This means you only pay tax on half of the profit. This discount is particularly beneficial for long-term investors. Main Residence Exemption: Your primary home (main residence) is generally exempt from CGT. However, this exemption does not apply to investment properties. If you have used your home to generate income (for example, by renting it out), you might have to pay CGT on part of the gain. Temporary Absence Rule: If you move out of your primary residence and rent it out, you can still claim it as your main residence for up to six years for CGT purposes, provided you don’t treat another property as your main residence during this period. This can be a valuable exemption for those who temporarily relocate or decide to rent out their home before selling. Small Business Concessions: If you’re a small business owner, you might be eligible for additional CGT concessions when selling a business property. These include: 15-year exemption: No CGT is payable if the property has been owned for 15 years and the owner is 55 years or older and retiring, or is permanently incapacitated. Retirement exemption: Up to a lifetime limit can be exempt from CGT when selling a business. Rollover concession: Allows deferral of CGT if a replacement asset is acquired within a certain period. Record Keeping: It's crucial to keep detailed records of all expenses related to the property to accurately calculate your cost base and claim all eligible deductions. Proper documentation helps in substantiating the cost base and any improvements made, which can significantly impact the CGT payable. Why Choose Noble Avenue Real Estate? At Noble Avenue Real Estate, we pride ourselves on our deep local knowledge and commitment to the community. Whether you’re buying, selling, or simply exploring your options, we’re here to help every step of the way. Our innovative services like Noble Elevate ensure that your property stands out in the market, often selling for higher prices. With comprehensive marketing strategies and unparalleled customer service, we strive to make every real estate experience smooth and successful. Final Thoughts Understanding CGT can help you plan better and save money when selling your property in the next financial year. For tailored advice and further assistance, it is advisable to consult with a tax professional. Navigating through the intricacies of CGT can be daunting, but with the right knowledge and preparation, you can maximise your benefits and ensure a smoother selling process. If you have any questions about CGT or need further clarification, feel free to reach out to our team at Noble Avenue Real Estate. For more information and to find out how much your home is worth in the current market, visit nobleavenue.com.au/request-appraisal.

May 11, 2024

Noble's Essential Guide to RCD's: A Safety Priority for Homeowners and Landlords

Residual Current Devices (RCDs) are essential safety components in any WA home, designed to dramatically reduce the risk of electric shock and prevent electrical fires. However, we find that many people aren't fully aware of the importance of these devices, especially the fines and penalties associated with non-compliance. Western Australian regulations mandate that all homes and businesses must install at least two RCDs to protect all circuits supplying power points and lighting. How RCDs Function as Your Home's First Line of Defence RCDs act swiftly to protect your home in several scenarios: Scenario 1: Faulty Appliance in the Bathroom Imagine you're using a hair dryer with a frayed wire in the bathroom. If you turn it on, the electrical current may leak to its metal parts, posing a risk of electrocution. An RCD detects this leakage and cuts off the power supply immediately, safeguarding you in a high-risk environment. Scenario 2: Outdoor Power Tools While using an electric lawnmower, if you accidentally cut through the cable, or if the mower has an internal fault, an RCD will detect the surge or leakage and disconnect the power, preventing potential electrocution. Scenario 3: Kitchen Appliance Malfunction If a kitchen appliance like a blender malfunctions due to wear or damage while you're using it, the RCD monitoring the kitchen's circuits will detect any electrical flow discrepancies, immediately shutting down the power to prevent shocks or fires. Regulatory Requirements for Homeowners and Landlords Homeowners: It is mandatory to install at least two RCDs covering all power and lighting circuits before transferring the title of your property. Failure to comply can lead to significant penalties, underscoring the importance of these devices in safeguarding new homeowners. Landlords: You must ensure that your rental properties are equipped with at least two RCDs before new tenants move in. This serves as a critical safety measure and fulfils a legal obligation to protect both you and your tenants from the consequences of non-compliance. RCD Testing and Maintenance Regular testing of your RCDs is crucial to ensure they are functioning correctly: Inspect Your Meter Box: Ensure it is in good condition. Locate the 'Test' Button: Each RCD has a button marked with a "T". Conduct the Test: Press the test button. The RCD should flip OFF instantly. Reset the RCD: Flip it back ON. If it doesn’t function as expected, contact a licensed electrical contractor immediately. The Benefits of RCD Installation Prevention of Electric Shock: RCDs provide a critical protective barrier by monitoring electrical currents and reacting to any unsafe changes. Reduction of Fire Risks: They help prevent electrical fires that can occur due to short circuits or overheating appliances. Peace of Mind: Knowing that your electrical system is continuously monitored provides significant reassurance. Ensuring Compliance Always engage a licensed electrical contractor for the installation or inspection of your RCDs. Remember, performing DIY electrical work is not only dangerous but also illegal in Western Australia. For more detailed information directly from the regulators, please visit the RCD rules on the Department of Energy, Mines, Industry Regulation and Safety website. Noble Avenue Real Estate's Commitment to You Our commitment extends beyond simply selling homes. We're dedicated to making the process of selling your home as smooth and stress-free as possible by ensuring every property meets the highest safety standards. We navigate the complexities of regulatory compliance, particularly around RCD installation and maintenance, to ensure that all advice we provide is accurate and timely. When you choose to sell your home with Noble Avenue, you're partnering with a team that takes every detail into account. We guide you through every step, ensuring your home is compliant with all safety regulations, ready to provide a safe environment for its new family. If you're considering selling your home, contact us today. Let's make the journey to sell your home easy and secure, ensuring compliance and peace of mind for you and your family. Contact Us: Email: info@nobleavenuerealestate.com.au Phone: (08) 9307 1280 Visit Us: 2/46 Angove Drive, Hillarys WA 6025