It is no secret the property market has been hot over the past year. Sydney and Melbourne are in "boom" territory and the sunshine state is also giving Brisbane investors a warm feeling.
No wonder then that many investors, upgraders and baby boomers are cashing in on their nest eggs and selling for a profit while the good times roll on. After all, it was one of the world's most famous investors, Warren Buffett, who said: "Buy in gloom, sell in boom." Selling now could be a beautiful reward for years of hard work and sacrifice.
However, capital gains tax (CGT) can quickly eat into that attractive figure on the contract and make your cash payout much smaller than you originally thought.
Domain has spoken to the experts about the 10 best ways to minimise your tax when it comes to selling property.
1.Live and let live
One of the best-kept secrets to dodging capital gains tax is to live, then let live. In other words, you can live in your property, then let someone else live in the same property, but still claim it as your principal place of residence (PPOR) for up to six years.
General manager of ThinkConveyancing.com.au, Christopher Lane, said, generally speaking, your property was not your "main residence" once you had moved out.
"However, there are circumstances where you can treat a property as your main residence after you've moved out for the purposes of avoiding capital gains tax, under the CGT main residence exemption," Mr Lane explained.
"For a period of up to six years, you can treat your property as your main residence if you satisfy the eligibility criteria."
The six-year rule was established to allow for those who have job transfers, either regionally or overseas.
You could still technically move to the next suburb, just a few hundred metres away, according to Momentum Wealth managing director Damian Collins.
Mr Collins said just because you rented out your property did not mean you had to give it up as your PPOR.
"If you rent it out, you get all the benefits of interest deductions and potentially, depending on the debt, the benefits of negative gearing," he said.
"If you buy another property, you then have a choice. You can choose which one is your primary residence and you don't have to choose until you sell it."
The obvious big plus is that if you own two properties, the one with the most capital gain can be claimed as your PPOR. Talk about a good idea!
However, you cannot just guess. Mr Collins pointed out that it was important to get a valuation on each property at the time of renting it out, just in case you used another property as your PPOR later on.
"The other one would be subject to capital gains tax and so you need to know the market value the day you move out," Mr Collins said.
Mr Lane added that many investors and homeowners were not aware of the six-year rule, but it could save them thousands of dollars.
"Recently we sold a property for a James, who had lived in the property prior to moving in with his partner," Mr Lane said.
"They had decided it was time to upgrade to a larger family home so they were selling up. He had budgeted CGT into the equation and was thrilled when he discovered he was almost $27,000 better off by applying the six-year rule."
2. Keep your investment pad for more than 12 months
Cannot avoid capital gains tax? Then reduce it.
Chan & Naylor managing director Ken Raiss said anyone who had bought an investment property should hold it for at least a year, reducing the capital gains tax by 50 per cent.
"This reduced amount is added to the owner's normal income and taxed at the marginal tax rate," he explained.
Do not forget that your 12-month ownership is from the date of contract for both the purchase and sale of a property.
"Particularly in Sydney, Melbourne and even Brisbane at the moment, people like to take a quick profit," Mr Collins said.
"If you purchased a property in April and settled in May, then sell in March with a long settlement until June, it's not 12 months. You must go from the contract dates."
3. Make the most of a low-income year
We all have good and bad years and our income often reflects our personal circumstances, according to Mr Lane.
He said CGT was closely linked with income tax and so the timing of when you incurred CGT was critical to getting the best outcome.
"If you're having a low-income year and you think you'll be in a lower-than-usual income tax bracket, run your numbers on selling out and make the decision with time before the end of the tax year," Mr Lane said.
"Things to watch out for include maternity leave, job loss, extended periods between job contracts and unpaid, long overseas holidays. They all present great opportunities."
4. Delay the contract date
If you are keen to cash in on the Sydney boom, you might be better off waiting to sell until next winter, or more accurately, July 1. This would save you a whole financial year of payable tax.
"If contracts are signed on July 1, rather than June 30, the tax liability is pushed out by 12 months," Mr Raiss said.
"Holding onto your money longer is almost as good as a tax deduction."
You could also put the profits from your sale into an offset account, helping to reduce the tax payable on other mortgages in the meantime.
5. Buy the property – just not 100 per cent of it
Found your dream investment, but worried about holding costs? Why not go in with a partner? If you own 100 per cent of a property, you get 100 per cent of deductions, but you also have to pay 100 per cent of the capital gains tax.
"I'm always one to think that a dollar in the hand today is worth more than a dollar in 10 years," Mr Collins said.
"If it's a long-term investment, buy the property in the name of the person where it's most tax advantageous now."
That means if the property is positively geared, purchase in the name of the person on the lower income.
If the property is likely to be negatively geared, purchase in the name of the person on the higher income.
"It depends on the sort of property you buy and the income that flows from that," Mr Collins said.
6. Put your profit into your own super account
When you sell the property, consider putting part, if not all, of the profit into your own super account. It is just like salary sacrificing, meaning you will not be taxed as much.
"Depending on your age, a taxpayer can contribute a maximum of $30,000 or $35,000, including the 9.5 per cent super guarantee, into super," Mr Raiss said.
"For taxpayers aged over 55, they could even move into a transition to retirement to improve contributions further."
7. Purchase the property in a trust
Alternatively, it might also be a good idea to purchase a property with a number of people in a discretionary trust. Mr Lane said the use of trust structures was on a steady rise and might benefit those on lower marginal tax rates.
"Let's be honest, who knows where they'll be in six months' time, so anticipating your individual financial circumstances into the future is almost impossible," he said.
"A discretionary trust allows many of those decisions to be made closer to the sale event and the outcome better planned, which produces better tax outcomes. It allows you to decide which of the members of the trust will receive the profit from the asset sale. It means you can direct the profits to the most tax-effective person at that time."
8. Sell the lemon with the lemonade
The property market might be booming in Sydney, but not all parts of the country have had amazing results. If you are selling for a profit, consider also letting go of the lemon.
The loss of the lemon and the profit from the lemonade in the same year will reduce the overall tax rate. For example, if the sale of a property results in a $200,000 gain, but a dud property results in a $50,000 loss, the taxable profit would be $150,000. Suddenly, that sour lemon would taste quite sweet.
9. Claim deductions and keep records
We all know you can claim deductions for things like rates, insurance and body corporate or strata fees, but have you considered all the possibilities?
"Expenses that are often overlooked include writing off any borrowing expenses, including lenders' mortgage insurance, costs associated with advertising the property, including furniture packs, and the original costs associated with investigating the purchase of the property," Mr Raiss said.
You also need to be vigilant with your record keeping. Mr Collins said a lot of people did not include renovation costs when it came to claiming expenses.
"This is part of the cost base of the property and the cost base, being high, means the CGT is reduced," Mr Collins said.
10. Pre-pax tax on another property
Well-known property author and investor Jan Somers said it was pretty tough to avoid the tax man, but investors who were selling and making a profit might also be able to pay their mortgage fees on a second property one whole financial year in advance, if they actually had the cash to do this.
For example, if property A is sold for a profit of $200,000, the interest on property B could be pre-paid for one financial year. This might cost $50,000 and reduce the overall taxable gain across a property portfolio.
"If you have a $1 million loan and you pay the 5 per cent interest on that, which is $50,000, you would have a $50,000 deduction for that year, but you have to have a financial advantage," Mrs Somers explained.
"You would need to get an interest rate of 4.92 per cent instead of 4.95 per cent and it's only worth it if you're selling within a few months of the [new] financial year."
Banking on the six-year rule
Empower Wealth founder and chief executive Ben Kingsley lives by the mantra of buying and holding.
However, he said the six-year rule, where you could claim a property as your PPOR even though it was being rented out, still applied to investors who preferred to hold. After all, you never know where you might be in 20 years down the track.
The property lover and his wife Jane bought a two-bedroom semi in Alexandria, Sydney, for $395,000 back in 2001. They lived there until 2004, when work commitments forced the couple to move to Melbourne.
Even though they rented the Alexandria property out from 2004 until 2010, they could still claim this property as their PPOR during that time, if they want to later in life.
"From 2004 to 2010, it's obviously one of the properties we're now considering for the six-year rule," Mr Kingsley said.
"In 2010 we had it valued, but we also bought a cracking property in Flemington [in Melbourne], which has had amazing gains as well."
The two-bedroom terrace in Flemington was purchased for the same price as the Alexandria property – $395,000 – in 2007. They lived in the terrace until 2009, which means the Flemington property could also potentially be claimed as their PPOR, instead of the Alexandria property.
It is a nice problem to have and it all comes down to which property has had the most capital gain. The property with the most gain could be used as their PPOR, on paper, once the couple hits retirement and sells, to avoid CGT during that period.
Mr Kingsley estimated the Alexandria property would now be worth $1 million, while the Flemington terrace would be worth about $850,000.
"The message is you don't have to sell," Mr Kingsley said.
"You can lock in the gain and have it revalued at the end of that period and that gain is potentially there to realise the benefit, if you ever choose to sell.
"A lot of people think you have to sell at that six-year point. The reality is you don't. The moment you move out, you should get a valuation done and keep it on file, the same way you keep capital costings on file."
Some are caring, some are sharing, and everyone's cashing in as an increasing number of home-owners and tenants subsidise their mortgage and rents by time-sharing their car spaces – and sometimes even their cars too – when they're not using them.
They're currently making up to $90 a week on car spaces in prime locations during 9am to 5pm when they themselves have driven to work, leaving the space empty, and up to $40 a day for their cars.
"Parking can be extremely expensive in some areas of Sydney and Melbourne, so people are finding they can really help their budgets by allowing others to also use their car spaces," says Nick Austin, the CEO of Divvy Parking, the company that handles bookings and payments for privately-owned car spaces when they're not in use.
The founders of Car Next Door Dave Trumbull and Will Davies (right).
"Lots of people leave their spaces vacant for times when they, say, drive to work, so we're helping them unlock the value of these assets. For owners it may help with their mortgage payments or household bills, and for tenants, it helps with their rents."
In Sydney, where one car space in Elizabeth Bay in the eastern suburbs recently sold for a record $210,000, the uptake since Divvy Parking's web-based system launched in late 2011 has been increasing exponentially. Currently, about 1000 people are leasing out their car spaces mostly in apartment buildings for various periods, and about 2000 are regularly renting them, with those figures expected to triple in the next 12 months.
Spaces in the CBD go for the highest rates, from $55 to $120 a week, depending on location, with those in North Sydney reaching $90 a week, Surry Hills up to $80 a week, and Redfern, Pyrmont and Potts Point up to $70.
In Melbourne, where the system will officially launch in two weeks, there's already been a huge number of inquiries, and people who have car spaces that are vacant at times have already started registering and listing their locations. The most popular are likely, again, to be the CBD for up to $90 a week, with other areas in demand set to be Docklands, Richmond, Hawthorn and St Kilda.
The idea of people sharing their car spaces was inspired by the stellar success of the Airbnb online collaborative consumption model, where people go online to rent out their property, or rooms in their homes, to visitors.
That's also kicked off another company, Car Next Door, where car-owners can rent out their own cars by the hour, day, week or month, on an online system. There are now 130 cars in Sydney registered for use since the business began at Christmas 2012, and 40 in Melbourne, where it launched in February this year, and over 5000 car-borrowers.
"The cars are in a range of suburbs," says Car Next Door CEO Will Davies. "In Sydney, they're mostly in Bondi, Newtown, Redfern, Surry Hills, Paddington and Randwick, and in Melbourne, in Brunswick, Fitzroy, St Kilda and Balaclava.
"They range from older models that people rent out for $5 an hour to newer, more upmarket models for $40 a day. We're hoping to double the number of participants in both cities in the next six months."
If the owner decides to sell the property (including caravans), the tenant can be affected in a number of ways.
In a fixed agreement, the owner cannot make the tenant leave because they decide to sell the property. The tenant can stay until the end of the term, and the new owner will become the lessor.
If the tenant is in a periodic agreement, and the owner requires vacant possession, they must give the tenant a Notice to leave (Form 12) or Form R12 for rooming accommodation. The tenant must have at least 4 weeks’ notice from the signing of the contract of sale.
When a moveable dwelling park is being sold to a new ownerIf the moveable dwelling park is being sold but the moveable dwelling tenancies will continue, the outgoing owner/manager must advise the tenants of the upcoming change of owner/manager. This notification is called an Attornment notice. More details are available in the Moveable dwelling park closure fact sheet.
An open house or on-site auction can only be held if the tenant agrees in writing.
If the property is put up for sale within two months of a tenancy starting and the tenant was not informed that the intention to sell the property at the time of signing the agreement, the tenant has the option of ending the agreement with two weeks’ notice. The tenant must give the Intention of notice to leave (Form 13) to the lessor/agent within 2 weeks after the end of the initial 2 month period of the tenancy.
If the selling agent is different from the agent who manages the property, the selling agent must also give the letting agent a copy of each Entry notice before entering the property.
If a property is being repossessed by a financial institution which had not agreed to the property being rented, they can give the tenant 2 months to leave (30 days for rooming accommodation), using a Notice to vacate from mortgagee to tenant (Form 19) or Form R19 for rooming accommodation. If they had agreed to it being used as a rental property, they can end a periodic agreement with two months notice, but cannot end a fixed term agreement earlier than the end date unless the tenant agrees.
Residents call on John Rau to give answers over home rezone plans and five-storey push for Brighton
Residents are calling on Planning Minister John Rau to front a public meeting to explain rezoning plans. Picture: Stephen LafferSource: News Limited
IRATE residents are calling on Planning Minister John Rau to front a public meeting to explain his proposed expansion of a commercial zone at Brighton and Hove.
Mr Rau has proposed buildings of up to five storeys along sections of Brighton Rd.
He has also proposed rezoning 12 homes for commercial development as part of the Brighton and Hove District Centre Development Plan Amendment.
Holdfast Bay Council submitted its draft plan to the Minister earlier this year after a lengthy public consultation process, calling for lower height limits and fewer rezoned homes.
More than 500 submissions and a 350-name petition were lodged with the council against rezoning homes such as 1 and 2 Rutland Ave and 10 Edwards St as commercial.
Residents also opposed raising building height limits, citing fears of increased traffic and overshadowing of properties.
In a letter to the council last month, Mr Rau rejected the concessions the council had made to residents in the plan.
Instead, Mr Rau proposed lifting height limits from three storeys to five in some sections along Brighton Rd and suggested rezoning a dozen residential properties to commercial.
Rutland Ave resident Greg Smith said residents had invited Mr Rau and Holdfast Bay elected members to a public meeting at the Bay Function Centre, Glenelg Oval, at 7.30pm this Wednesday.
Mr Smith said residents were “disgusted” by the turn of events and said the government’s move to revert to the higher limits would “undermine and subvert this democratic process and the role of all local councils”.
“All residents have the potential to be affected by this style of State Government planning intervention and so all are encouraged to attend this most important meeting,” he said.
Residents pooled about $15,000 to hire a planning consultant to represent them during the council’s analysis of the plan, which has been under consideration since 2009.
Mr Rau urged the council to respond to his suggestions within six weeks of his September letter.
Holdfast Bay Council is expected to approve a response from chief executive Justin Lynch at a meeting tonight (Tuesday, October 28).
“The council is concerned and disappointed with your proposal to include a number of properties within the District Centre Zone that were either proposed to be removed from the Zone post-consultation (and therefore proposed to remain in a residential zone) or not considered as part of the DPA investigations,” Mr Lynch’s draft letter said.
“(The) heights do not reflect the desire of the community as highlighted throughout the consultation process.
“The council received significant feedback on this DPA during public consultation.
“It is therefore critical that this feedback is carefully considered when making any changes to this DPA to ensure that future development outcomes will be supported and embraced by both businesses and the wider community.”
Mr Rau refused interview requests last week.
He told the Guardian Messenger in a statement: “As the decision maker it is completely inappropriate for me to give a running commentary on a process that is incomplete.
“In accordance with the Act I wrote to the Council seeking their response to the proposal.
“I have not yet received a response.
“This feedback will be considered before a final decision is made.”
It is one of the best readings on really knowing your super.
Also when it comes to insurance you need to know that it is actually being paid. Yes their have been cases where you nominate it but it was not paid. So make a note today call insurance company and check if they are being paid by your SMSF.
So what are the simplest and fastest ways people can boost their superannuation balances?
Tom Garcia, chief executive at not-for-profit
organisation the Australian Institute of Superannuation Trustees
(AIST), says an easy way to boost your super can be as straightforward
as consolidating multiple super accounts to reduce fees.
“One in two Australians have an inactive or ‘lost’ super account, so it’s always worth checking the ATO’s lost super website www.superseeker.com.au,”
Garcia says. “A difference of just half a per cent in annual fees can
literally mean the difference of $50,000 at retirement, all other things
Even after consolidating all super accounts,
Garcia says the fees payable – administration fees, investment fees and
insurance fees – is still an important consideration when thinking of
how to best build one’s superannuation balance.
He suggests not-for-profit
funds – otherwise known as industry funds – as one suitable vehicle to
store retirement savings as they return their profits to the members and
do not pay commissions to financial advisers.
Larger not-for-profit funds are open for
anyone to join, while a select few are restricted to employees in a
particular industry. Generally however, they are low to mid-cost
accumulation funds – although some have high fees. Refer to this useful guide by MoneySmart on the different types of super funds.
“Not-for-profit funds are also extremely
competitive when it comes to offering low-cost insurance, particularly
compared to what can be purchased outside the super sector. When looking
at fees, don’t forget to review what sort of insurance you are
receiving – you may be paying more because of higher insurance cover,”
Insurance costs refer to the group insurance
that super funds offer that include the likes of life insurance, total
and permanent disability (TPD) insurance and so forth.
Lauren Radcliffe, superannuation consulting
manager at Pitcher Partners, echoes Garcia’s thoughts on the importance
of checking what death and TPD insurance fees are being paid. “Insurance
premium costs, and the level of cover available or provided can vary
significantly between funds.”
Garcia also advises people to regularly top up their super funds.
“If you have money available, voluntary
contributions into your super attract a low tax rate, and compounding
interest means your money will be worth a lot more when retirement comes
around,” Garcia says.
There is also a range of government
incentives available designed to help people effectively save for their
retirement. According to Garcia, low and middle-income earners may be
eligible for the government co-contribution scheme.
“For those with an 'adjusted' income of less
than $34,488 the government will put 50 cents into your super fund for
every one dollar after tax contribution you make (up to $500). You can
still get the government co-contribution up until an income of $49,488
but at a decreased rate.”
Meanwhile, low-income earners can capitalise
on the low-income superannuation contribution (LISC), although this
initiative was recently repealed as part of the repeal of the Mineral
Resources Rent Tax. However, the LISC will be payable on contributions
up until 1 July, 2017.
“The measure – which is automatically applied
and does not require people to make extra contributions – provides a
tax refund of up to $500 for individuals earning
under $37,000. This makes sure they don’t pay more tax on their super than their take-home pay.”
Radcliffe recommends high-income earners
should maximise their concessional and non-concessional contributions up
to the allowable limits.
If they have a self-managed superannuation
fund (SMSF), there are strategies that can be utilised once the
contributions caps have been reached.
“If cash is not available, high-income
earners should seek advice on what other assets may be suitable to
contribute to their SMSF.”
Depending on your circumstances, Radcliffe
says SMSFs can be a more effective retirement savings vehicle than the
average APRA-regulated fund.
“SMSFs generally provide greater control and
flexibility over investment decisions. An SMSF may also provide more
flexibility for putting tax-effective contribution and benefit
strategies in place. Additionally, fees in an SMSF may be lower than an
APRA-regulated fund if your balance is sufficient to make an SMSF
cost-effective,” she says.
Radcliffe also points out how gearing can be used by SMSF trustees to build their superannuation.
“Gearing – via a limited recourse borrowing arrangement
– may provide potential for increasing your super benefits. However,
care must be taken to ensure all legal and compliance requirements are
SMSFs are best suited to financially savvy
individuals who wish to take complete control of their superannuation
and require significant administration and management of investment
strategies. They are not for everyone.
Although it is easy to feel overwhelmed
comparing your superannuation balance with the lump sum you will
eventually need to bankroll a comfortable standard of retirement, Garcia
says it is important to remember that a majority of Australians will
also qualify for the government’s Age Pension payment.
“Get proper financial advice and talk to your
super fund to make sure you are in the best position possible for a
This article looks at super in a general way;
if you need specific advice regarding your situation, you should
consult an appropriately qualified and registered professional.
For a long time people have been asking me to make a Facebook page so they can quickly see what I am blogging about. This way you can see the subjects that I am blogging and get to see information quickly. Also its a great way to read the articles.
Please like page and then it automatically shows you new posts.
Bonus you can always unlike page to stop posts. I like this about Facebook. https://www.facebook.com/iloveproperty.net
Its simple !!! go this link and have a look around what people are applying for.
Just do some homework.
Look at applications.....
Find a sub division
Go to an address and do some reverse research.
This type of bump on research can lead to finding a deal.
Find out what they paid for the site.
Find out what they are doing to the site and what their costs might be.
Find out how many of these are going on in the area.
Find out what they might make out of this finished development.
Then work out a percentage.
Also talk to some local town planners to verify your results.
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School safety concerns as Canterbury Council rezones surroundings
October 15, 201412:00AM
Canterbury Mayor Brian Robson.
The safety and privacy of St Joseph’s Primary School students
remains a concern to the Catholic Education Office as the possibility of
commercial or high rise development around the site looms.
Canterbury Council approved rezoning the land around the school from residential to business at an extraordinary meeting.
Education Office regional director of inner western schools Michael
Krawec said the office would “keep an eye” on the site.
students take high priority especially coming to school and one of the
parts of the rezoning was making Wilson Lane double the size which would
allow for big commercial vehicles to come through,” he said.
St Joseph's Primary School, Belmore
“That lane is used by students coming to and from school so it is a safety issue.”
Mr Krawec said privacy from potential multistorey buildings around the school and noise and pollution were other concerns.
The rezone also includes parts of Canterbury Rd, Thompson Lane and Chapel Rd in Belmore.
Canterbury Mayor Brian Robson said “the safety of children is of paramount importance to council.”
“Council will be vigilant in putting in place necessary safety measures,” he said.
“The business zoning permits a wide range of uses, but typically is associated shop top housing.”
If you need a deposit for a property but your money isn’t immediately available, a Deposit Protect Bond (also known as a deposit bond) gives you a substitute for a cash deposit until settlement. It’s useful if you have cash tied up a term deposit, your current home or other investments and need more time to convert your assets to cash.
How a deposit bond can benefit you
It's quick and easy to arrange
It's economical – you only pay a one off fee
It's flexible – you can use it at multiple auctions, purchasing land, residential or commercial properties.
Who can use a deposit bond?
A property owner wanting to buy another property
An investor wanting to expand their portfolio
A first home buyer.
Who can apply for a deposit bond?
A Deposit Protect Bond can be issued for up to 10% of the purchase price of your property
Short term guarantees are available for settlement terms up to 6 months.
Talk to a Westpac home loan expert on 131 900 for more details.
Every year tens of thousands of Australians become a
bankruptcy statistic however the reasons for, and implications of,
filing for bankruptcy are not well understood. Megan Shannon shares
“The Facts about Bankruptcy”.
Last month we looked at company insolvency, this
month we turn the spotlight on personal insolvency, more commonly known
as bankruptcy. Bankruptcy is the process whereby people who are unable
to pay their debts receive protection under the Bankruptcy Act 1966 and
their affairs are administered by a trustee. The Bankruptcy Act relates
only to individuals. Companies which cannot pay their bills are dealt
with under the Corporations Act 2001, as discussed last month.
Bankruptcy and the formal alternatives to bankruptcy are overseen by the Australian Financial Security Authority.
You can declare yourself bankrupt or a creditor to
whom you owe more than $5,000 may apply to the court to have you made
bankrupt. For bankruptcy to be considered, you must be insolvent.
When you declare yourself bankrupt, and advise your creditors, they may
no longer pursue you for payment of outstanding debt.
Bankruptcy is overseen by a trustee. A trustee acts to recover funds to pay creditors. These funds may be recovered by way of:
Sale of certain assets
Recovery of income over a certain limit
Recovery of property transferred to a 3rd party prior to bankruptcy
Typically, bankruptcy lasts for a period of three
years, however under some circumstances your trustee may raise an
objection and seek to have the period of bankruptcy extended by up to
Consequences of Bankruptcy
Bankruptcy should be considered the last resort
when facing personal financial hardship as it has far reaching
You will be listed on the National Personal Insolvency Index,
permanently. It should also be noted that a Debt Agreement and a
Personal Insolvency Agreement will result in listing on this index.
Your credit will be impacted as you will be listed on a credit
report for 7 years, which most credit providers will access in
determining if they will extend credit.
Assets may be seized and sold to repay debts
Your employment may be impacted as many professional bodies
have their own regulations regarding bankruptcy, which are not subject
to the provisions of the Bankruptcy Act.
You will be unable to manage a corporation as this is expressly prohibited under the Corporations Act.
You will be unable to travel overseas as you will be required to surrender your passport to your trustee.
Alternatives to bankruptcy
For those in the midst of financial hardship,
bankruptcy may seem to be the only way to stop creditors chasing them.
However, there are other options which are worth considering and
discussing with a financial counsellor, before choosing bankruptcy.
These options include:
Many creditors are agreeable to come to an
arrangement allowing additional time to pay, or regular payment
instalments. The key to any creditor accepting an arrangement is early
identification of a problem, proactive contact and a genuine effort to
A debt agreement is a legally binding proposal
between you and your creditors, which, if accepted by the majority (in
dollar terms) gives protection without having to file for bankruptcy.
Examples of debts agreements include:
Paying a portion of your unsecured debt, rather than the whole amount, ie less than 100 cents in the dollar.
A moratorium on debts, ie recovery action ceases
Regular payments to creditors from your income
Property being sold or transferred to creditors to partially or completely extinguish debts
Not everyone in financial distress has the option of a debt agreement. There are regulations in terms of previous bankruptcy history, debt amounts and after tax income.
A person is released from a debt agreement when
all obligations and payments have been met. Typically, a debt agreement
does not run longer than four years.
Personal Insolvency Agreement
A Personal Insolvency Agreement is another legally
binding agreement between you and your creditors, however, unlike Debt
Agreements, there are no limitations in terms of debt or income. A
Personal Insolvency Agreement may be accepted when the majority of
creditors, representing at least 75% of the debt, agree.
As with bankruptcy each of these agreements may be
listed on credit reports. For more information on formal options listed
above visit the AFSA website.
Some people may be embarrassed at their inability
to meet their financial commitments; however, often the triggers of
financial hardship can be completely unexpected and frequently out of
your control. For example, a relationship breakdown, sudden
unemployment, protracted illness, or even fraud. The key to managing
financial hardship is to act early. Don’t hope that the debt will
suddenly disappear or that your creditors will cease pursuing you for
Before deciding on your course of action, speak
with a financial counsellor to discuss your options and understand what
will work best for your circumstances. For more information on
financial counselling or to find a financial counsellor in your state go
to Financial Counselling Australia or ASIC’s MoneySmart site.
This information does not take into account your personal circumstances or situation or needs.
Recent research has highlighted that Generation Y has a
positive outlook on housing affordability and that women in particular
are very savvy when it comes to financing their home.
Realestate.com.au recently released the findings from its
Housing Affordability Sentiment Index. A particularly interesting
finding from the HASI was that the driving force behind the improved
perception was positivity from first-time home buyers and Generation Y.
It turns out that Gen Y “are the most positive about housing
affordability in the country, driven largely by an optimistic outlook on
their financial position.” What’s more it appears that they are acting
on their views with 14% of respondents reporting that they owned both a
home and an investment property.
Research recently conducted for
Westpac has identified that Gen Y (18-34 year old) women are
particularly financially focussed and property savvy. Here’s some of
87% of Gen Y females (versus 79% of men) list owning a home and paying it off as their top lifetime goal.
81% of Gen Y females understand what a variable rate is, compared to only 60% of Gen Y male
73% of Gen Y females list paying off their
loan sooner as the most important factor when taking out a home loan,
compared with 56% of Gen Y males
49% of Gen Y women listed owning a home as their top priority, way ahead of having children (14%) and getting married (5%)
Gai McGrath, General Manager of Retail Banking at Westpac applauds young women’s ambitions to get into real estate.
“It is positive to see Gen Y women prioritising
home ownership at a young age. Beyond this it’s good to see that they
keep their eyes on the prize with the goal to pay off their loans as
soon as possible. Truly owning a home is one of the best ways to start
growing long time financial security. These young women should arm
themselves with as much information as possible to make their money work
harder as soon as they put their deposits down”.
Here’s our top tips for Gen Y women (or anyone for that matter)to help them own their home sooner.
If you’re working towards buying your first property:
1. As soon as you start your first job you should put aside a portion of your salary towards a deposit for a house.
2. It’s worth investigating what government
benefits may be applicable to you as you could be entitled to financial
assistance if you are a first home buyer. For example if you purchase or
build a new property you may be eligible for a grant. Conditions and
amounts vary according to location.
3. Take advantage of technology. There are plenty
of online tools available, for example Westpac has home loan calculators
to help you plan ahead, simply visit westpac.com.au/homeowns.
If you already have a home loan:
1. If your loan has an offset facility, have your
salary paid directly into the offset account. It starts offsetting
against the balance of the mortgage straight away. Then, once the money
is in the account only transact when it is necessary.
2. Increasing the frequency of repayments is
a simple way to make savings. Even by paying half your monthly
repayment every fortnight means you could make the equivalent of an
extra month’s repayment every year.
3. Consider putting any lump sums of money you receive into your offset, such as a tax refund or salary bonus.