Australia's property taxes top $52.5 billion p.a.

By Paul Bennion, Managing Director, DEPPRO

The 'hidden' cost of owning an investment property has been revealed by the latest ABS figures on Government taxation revenue which shows that Australian property owners are now paying collectively $52.5 billion in property taxes each year.

Unfortunately, many property investors do not factor in the cost of these property taxes when purchasing an investment property and how fast they have grown over the past decade.

Overall, total property tax collections in Australia have surged by nearly 70% over the past decade.

The biggest jumps in property tax collection have been in both New South Wales and Victoria.

In New South Wales, total property tax collections per annum have nearly doubled over the last decade from $9.3 billion to $18.2 billion while in Victoria they have also nearly doubled from $7.5 billion to $14.9 billion per annum.

There also has been significant increases in overall property tax collections in Queensland which now total $8.7 billion per annum as well as Western Australia with property owners now paying over $5 billion in property taxes each year.

These figures show be a wake-up call for property investors to ensure they focus on providing sufficient funds for property taxes.

For an average property in Perth, for example, property taxes for an average property can cost an investor more than $2,000 per annum.

The reality is that many investors buy a property investment for the first time tend to ignore these significant ongoing Government taxes associated with holding a rental property.

Generally, most of these property taxes are imposed mid-year to coincide with the start of a new financial year meaning that an investor could be confronted with Government taxes totalling thousands of dollars at this time of year.

These property taxes can have a major impact on the cash flow of property investors and make it financially more difficult retain their investment property especially if they have not properly budgeted for these taxes.

In addition, these property taxes are generally rising each year which means that property investors have to find additional funds to cover these costs if they want to hold their property investment long term.

These 'hidden' costs of owning an investment property highlight the need for investors to ensure that they claim their full tax benefits associated with owning an investment property including depreciation benefits.

Tax depreciation benefits can substantially boost the cash flow of property investors and can amount to up to 60% of the total purchase price of an investment property.

For example, the generous tax refunds that can be obtained through undertaking a professional tax depreciation report can amount to thousands of dollars each year and help to offset this annual Government taxes.

DEPPRO has currently a large range of clients who annually receive very large tax refunds each year through claiming their legitimate deprecation tax benefit and use these refunds to help pay Government property taxes.

TMBL updates its Third Party Distribution Policy

Teachers Mutual Bank has become the latest lender to prevent brokers from submitting their own personal mortgage applications to the bank.

Following in the steps of Westpac, which announced in April that it would no longer accept loan applications from brokers where they are one of the named loan applicants, all brands under the Teachers Mutual Bank umbrella have also changed their credit policies.

As of Tuesday, 16 October, Teachers Mutual Bank, Firefighters Mutual Bank and UniBank has stopped accepting loan applications from brokers where the broker is also the applicant of the loan.

Mark Middleton, head of third-party distribution for Teachers Mutual Bank Limited, said:

"This change is in line with our responsible lending commitments and strengthens our standards."

Several other major banks have introduced similar changes relating to self-submissions this year, with ANZ announcing in February that it would no longer pay commissions to brokers that submit asset finance (including commercial) applications for themselves (or for loans in which they are party).

Further Information

For further information about this change from TMBank, please visit the TMBL Broker portal or contact your Broker Development Manager on 1300 TMBank or email broker@tmbank.com.au.

Christmas payment processing

We may only be in October but with Christmas not too far away we just wanted to get in early and provide an update in relation to payment processing times during the festive season.

We would like to advise you of some minor adjustments to payment processing times during the Dec/Jan.

Please be advised that:
Commissions normally processed and paid on the 25th will now be paid on 21st of December 2018. Transaction fee adjustments normally processed and paid on the last day of the month will now be paid on 2nd of Jan 2019.

Please do not hesitate to contact us on commenq@vow.com.au for further clarification if required.

Business diversification

Diversification into different channels has become a business necessity with the continuous changes we are seeing in the industry today.

Equipment Finance is a great avenue for you to help your clients, help your business and help your reputation. Offering equipment finance opportunities to your clients means you will build a longer lasting relationship as well as open up to the opportunity to diversify your book.

There are currently many opportunities in the lending market around commercial, equipment and small business lending.

To meet this emerging demand, Vow Financial has recently invested in a Commercial and Asset Finance division, providing our Brokers a larger panel of equipment finance lenders, a broader product suite and potential for deeper market penetration.

For this reason, we've created four email template campaigns for you to send out to your databases and start attracting equipment and asset finance opportunities.

If you have limited experience but are still keen to diversify into equipment and commercial finance, why not use one of our Equipment Finance Specialists, who are available to help you and your clients.

If you have questions on how to obtain your own accreditation, please contact your Business Development Manager for commercial & equipment finance.

Check out the templates below:

01 Equipment Finance - Looking for smart financing options for your business
02 Equipment Finance - We do the work so you can do life
03 Equipment Finance - Know what freedom feels like
04 Equipment Finance - Give a little more this Christmas

Contact details can be found here.