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Downsizing – Soon you will be able to put the proceeds in your Super (Learn How)

downsizing super contributions

Downsizing contributions into superannuation

From 1 July 2018, the Australian Government will introduce the Contributing the proceeds of downsizing into superannuation (downsizing) measure. This measure is part of a package of reforms to reduce pressure on housing affordability in Australia.

This measure applies to the sale of your your home, which was your main residence, where the exchange of contracts for the sale occurs on or after 1 July 2018.

If you are 65 years old or over and meet the eligibility requirements, you may be able to choose to make a downsizer contribution into your superannuation of up to $300,000 from the proceeds of selling your home.

Your downsizer contribution will not count towards your contributions caps or be affected by the total superannuation balance test in the year you make it.

You can only make downsizing contributions for the sale of one home. You can't access it again for the sale of a second home.

Downsizer contributions are not tax deductible and will be taken into account for determining eligibility for the age pension.

If you sell your home, are eligible and choose to make a downsizer contribution, there is no requirement for you to purchase another home.

upside-to-downsizingEligibility for the downsizer measure

You will be eligible to make a downsizer contribution to super if you can answer yes to all of the following:

  • You are 65 years old or over at the time you make a downsizer contribution (there is no maximum age limit).
  • The amount you are contributing is from the proceeds of selling your home where the contract of sale was exchanged on or after 1 July 2018.
  • Your home was owned by you or your spouse for 10 years or more prior to the sale.
  • Your home is in Australia and is not a caravan, houseboat or other mobile home.
  • The proceeds (capital gain or loss) from the sale of the home are either exempt or partially exempt from capital gains tax (CGT) under the main residence exemption.
  • You have provided your super fund with the downsizer contribution form either before or at the time of making your downsizer contribution.
  • You make your downsizer contribution within 90 days of receiving the proceeds of sale, which is usually the date of settlement.
  • You have not previously made a downsizer contribution to your super from the sale of another home.

Downsizer contribution amounts

If eligible, you can make a downsizer contribution up to a maximum of $300,000. The contribution amount can't be greater than the total proceeds of the sale of your home.

Example 1

A couple sell their home for $800,000:

  • Each spouse can make a contribution of up to $300,000.

 

 

Example 2

A couple sell their home for $400,000:

  • The maximum contribution both can make cannot exceed $400,000 in total.
  • This means they can choose to contribute half ($200,000) each, or split it – for example, $300,000 for one and $100,000 for the other.

 

Main residence exemption

The proceeds from the sale of the home are either:

  • exempt or partially exempt from capital gains tax (CGT) under the main residence exemption
  • would be entitled to such an exemption if your home was a CGT rather than a pre-CGT asset (that is, you acquired it before 20 September 1985).

Timing of your contribution

You must make your downsizer contribution within 90 days of receiving the proceeds of sale. This is usually at the date of settlement.

Making multiple contributions

You may make multiple downsizer contributions from the proceeds of a single sale.

However, the total of all your contributions must not exceed $300,000 or the total proceeds of the sale less any other downsizer contributions that have been made by your spouse.

You need to make all contributions within 90 days of receiving the proceeds of sale, usually the date of settlement, unless you have been granted an extension.

 

How to make a downsizer contribution

Before you decide to make a downsizer contribution, you should:

  • check the eligibility requirements for making a downsizer contribution
  • contact your super fund/s to check that they accept downsizer contributions.

You may also wish to seek independent financial advice in relation to the age pension asset tests.

 

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Selling An Investment Property

SELLING-AN-INVESTMENT-PROPERTY

Initially, you may think that selling a property with tenants will be too difficult, however there are several benefits. Some of the pros and cons include:

Pros

  • You will still be receiving rent throughout the selling process
  • Other investors may be attracted to a property that is already tenanted as they will receive rental income straight away.
  • Having a tenant living in the property can reassure investors that it is possible to rent this property out.

Cons

  • You will need to provide adequate notice to the tenant before having open inspections
  • Tenants may not present the property in its best possible light, which could devalue it.
  • Problems may start to arise between you and the tenant if the property takes a while to sell.

If you are considering selling a tenanted property, the process will be a little different and will require a lot of communication with the tenant. If you are able to keep the lines of communication open between you and the tenant, it may help avoid problems down the track. Listed below are a few points you will need to consider before putting the property up for sale.

When selling an investment property there are several factors to consider.


1.
First and foremost, consider the tenants. This may be your property but it is their home. Tenants can make or break a sale. Unco-operative tenants will make your agent’s life hell! It is up to them to present the property for inspection to prospective buyers.

SELLING AN INVESTMENT PROPERTY

2. Lease: Have a look at the term of your lease. It is always best to put the property on the market at the end of the lease. This will often up your pool of buyers to include buyers who want vacant possession, as well as investors who may want the tenants to stay. Do not put a 12 month lease in place and then decide to sell. The lease will be an encumbrance on the sale.

3. Tax: Investment properties attract Capital Gains Tax. Make sure you speak to your accountant to educate yourself on your own personal tax implications. The last thing you want is a huge tax bill.

4. Presentation: If you have difficult tenants, consider selling after they leave. Then tidy up the property and go to market.

Best of luck! If you need hints on how to handle tenants just give us a quick call.

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A Long Time on the Market is not helpful to Selling (here’s why)

Mistakes Sellers make

LONG periods on the market are counter- productive to an optimum result, according to Madeleine Hicks from Madeleine Hicks Real Estate.

“Ideally, you don’t want to have your property on the market beyond the optimised 30-day market period,” she said.

“This is the time when the property attracts the greatest interest.”

Mistakes Sellers makeIn the Brisbane Real Estate market, Mrs Hicks said sellers needed to engage an agent that truly understood how to provide the effective combination of five key selling essentials; sales method, marketing, pricing strategy, presentation and buyer feedback reporting.

These may seem fairly straightforward, but Mrs Hicks said presentation in particular was often misunderstood.

It was not just about mowing the lawn, cleaning the kitchen and dusting the skirting boards.

“The fundamental part of presenting your home is to make it your buyer’s home, not yours,” she said.

“A blank canvas is what you’re aiming for; it opens up the home to more potential buyers.

“The bottom line is, the more potential buyers, the more engagement, the better your offers; you need potential buyers to become emotionally engaged with your home so they want to make it their next home.”

Mrs Hicks recommended taking down family photos, de-cluttering everything and leaving the bare essentials.

“You’re aiming for display home with lived-in warmth,” she said.

“You want people to dream, dream of living in this space, of creating their home and all the potential that stretches out in front of them.

“You don’t want them walking into your life and judging whether that’s their lifestyle or not because then you’ll be narrowing your potential buyers down to people who are only in the same walk of life as you.”

Mrs Hicks said depending on how much you have accumulated and your style of living, you might want to hire a storage unit or fill up the garage.

“Certainly look at modern interior design photos and see what a beautiful blank slate looks like,” she said.

“If all else fails, hire a stylist who will get straight to the point and are able to bring in hire furniture to create a modern dream.” 

You can Download a copy of our guide "7 Mistakes Sellers Make & How to Avoid Them" Here

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How to Make Your Investment Property More Attractive to Quality Tenants

Make Your Property More Attractive to qualityTenant

With the demand for rental properties in the Stafford, Everton Park region continuing to increase, we are finding more people buying for investment purposes.  After all it is a wonderful part of Brisbane to live, and the rents that can be charged fully reflect this situation..

So if you are considering getting into property investing here are a few tips to help ensure that you can attract high quality tenants.  We know that finding reliable tenants is half the battle in property ownership. A reliable tenant will be able to pay you rent on time, will likely stay with you for a long time, and has a low likelihood of causing damage to your property. A good tenant, therefore, makes your rental property more profitable—all while causing less stress for you over the long term.

Tenant screening is the usual process landlords and property managers like the team at Madeleine Hicks Real Estate, use to recruit the best tenants for their units, and through it, filter out candidates with a questionable rental history, bad credit scores, or other red flags that make them liable to cause issues. But tenant screening only works for taking your existing applicants and finding the best candidates among them.

So, what can you do to make your property more attractive to high-quality applicants in the first place?

Pick a Good NeighbourhoodMake Your investment Property More Attractive to Reliable Tenant

This one may not be helpful if you already have a property, but if you’re just getting started or if you’re trying to add a new property to your holdings, it’s a good one to keep in mind. Invest in a property that’s in an area with low crime rates, good property values, good school systems, and access to amenities like restaurants and stores. If you can, get to know the neighbours and see if the average tenant would get along with them. These properties may cost you a bit more up front, but they’re likely to appreciate in value over time, and are far more likely to attract professional, reliable tenants.  The inner north west clearly ticks all these boxes.

Set the Right Rent 

Setting a rental price is rarely straightforward, but it’s an important variable to consider if you want to attract the right tenants for your property. One of the easiest ways to set rental prices is to see what other landlords in the area are charging and mimic them (adding or subtracting to compensate for the differences your property offers).

However, you can set your prices lower; this will increase the number of applications you get and could fill your property faster. The downside is that these tenants may have less income or less reliable income, and because you’ll be getting more applications, you may (not all low income tenants are bad)be dealing  with more low-quality tenants.

Instead, it may be wise to increase your rent prices, even slightly—it may take you longer to fill your vacancy, but you’ll attract better candidates. Psychologically, people place more value on more expensive things, so you might even end up with more satisfied tenants.

The experienced Property Managers at Madeleine Hicks Real Estate can help you setting the right price.  We can do this via thorough research and provision of a detailed report of the current market.

Offer Extra Perks

You may not be able to completely remodel, but you can offer some extra perks for your tenants that “sweeten the pot.” For example, you could install air conditioners and dishwashers to make it more convenient for your tenants to live here, or you could offer free internet to the property as an added luxury. Perks serve as good tiebreakers between competing properties, so they could make the difference in the types of tenants you receive applications from.  Other options could be included garden maintenance or water charges. If they have solar, pass the rebates onto the tenants etc.

Be Nice

This is a simple and obvious step, but an important one. As a landlord, you’ll be communicating with your new applicants, and their impressions of you could affect whether or not they want to move forward with the rental. If you seem brash or difficult to work with, tenants with an intention of a long-term stay may prefer to find someone friendlier or more communicative. You don’t need to be your tenants’ best friend, but you should be able to offer easy communication, flexible understanding, and a smile when meeting in person.  Or just use the professional team at Madeleine Hicks Property Management.

Work on the Kitchen and BathroomHow to Make Your investment Property More Attractive to Reliable Tenant

The kitchen and the bathroom are two of the most important rooms for your property, so if you can afford to make upgrades, make them here. The difference between an old and new bathtub, or between old and new countertops, can make a significant difference in the eyes of a stable, choosy tenant. Plus, you’ll be able to charge more for rent, and you’ll increase the value of your property at the same time. Kitchen and bathroom remodels can get expensive, but they’ll be able to provide you a positive ROI in the span of just a few years.  A great kitchen and bathroom will still not be enough if the rest of the house is poor quality, so ensure that the whole property and inclusions are in good, clean, safe working order.

Focus on the Curb Appeal

You’ll also want to improve the curb appeal as much as possible. “Curb appeal” updates don’t necessarily make the property more structurally sound or more comfortable, but will make a better first impression with your potential tenants, attracting a better crowd. You can improve the curb appeal of your property by investing in gardening and lawn care, fixing anything that appears to be broken or dirty on the outside, adding a fresh coat of paint, and making the inside of the house as tidy and presentable as possible.

Advertise Thoughtfully

If you know you want to appeal to a certain audience, target your marketing and advertising toward them. For example, if you’re seeking young families, you can emphasise the proximity of schools, or if you’re trying to attract professionals, you can mention how easy it is to get into the city on weekdays from your property. You’ll also want to take lots of images and videos of your property to include in your advertising—and get them professionally done, if you can. Attractive, accurate imagery will entice better and more interested tenants.

These strategies should cumulatively allow you to attract better tenant applications, giving you more high-quality tenants to choose from and easing the stress on your tenant screening process. However, it’s still important that you screen your tenants regularly if you want to ensure the profitability and consistency of your property.

If you need help finding and keeping the best tenants for your property, consider using property management services. Contact Madeleine Hick Property Management for more information on how we can help your property become more profitable.

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“Don’t renovate before selling” warns leading local agent

Madeleine Hicks Says Renovation properties available in Stafford and Everton Park

THE demand for fixer-uppers in Brisbane is so strong, property experts are warning homeowners about the risk of renovating before they list.

Madeleine Hicks from Madeleine Hicks Real Estate at Everton Park said, "we are seeing buyers looking for homes that they can do up.  Especially the older style timber properties that we have in abundance in Stafford and Everton Park."

"Buyers are loving the larger blocks that we have as well as the great city views" Hicks said.

SQM Research managing director Louis Christopher said too often people splash too much cash jazzing up their homes for a big sale.

“In a downturn, buyers will not value the renovations as much as the homeowner,” Mr Christopher said.

“We know the market will penalise over-capitalisation.”

Andrew Winter and Neale Whitaker.

Andrew Winter and Neale Whitaker. Picture: Mike Batterham

Star of Foxtel’s new show Love It or List It and design guru Neale Whitaker agrees, adding the decision to sell or renovate a property demanded thought and research.

“Be careful about overcapitalising,” Whitaker said.

“Have a look at similar properties that are unrenovated like yours in your area and see what they’re going for – and the type yours would be like after a renovation and what they’re going for.

“(Then) work out whether it’s worth doing because, let’s face it, even the most basic renovation is costly.

Even the most basic renovations are costly.

Even the most basic renovations are costly.

“But if you are torn, look at the potential resale value of the house as opposed to the property you would be thinking of buying and whether that’s a realistic transaction – and also the value that could be potentially added to your home.”

Whitaker said the majority of homeowners who decide to stay and renovate want to create more space.

“If they’ve been living somewhere for a long time, they stop realising the potential under their nose but with careful planning they can create the space they need,” he said.

“On the show we came across rooms that were completely redundant – one room was completely occupied by a cat – people get used to living a certain way.”

Renovations are booming in Brisbane’s inner-ring including Albion, Stafford, Alderley and Everton Park, with building renovations and carpentry the most popular, according to Australia’s largest network of trades professionals, hipages.com.au.

The data also showed bathroom and kitchen upgrades were a high priority with homeowners.

 

Mr Christopher said homeowners could renovate their property on a budget, sell it and upgrade to a better property for themselves.

“There are more buyers and freestanding houses in the marketplace,” he said.

“I don’t think we are in a market that is going to value one’s renovations all too well.”

Mr Christopher said Brisbane’s property market had improved however added “the pendulum is in the middle”.

“We are seeing more interstate migrations to Brisbane because of the price difference,” he said.

Love It Or List co-host Andrew Winter advised buyers to have realistic expectations when selling their property.

“Don’t expect to sell easily,” Winter said. “Never believe that your house will sell for more than market value, it can happen but generally it won’t.”

He said to avoid seller’s remorse it was important to hang on to your property if your financial situation allowed.

If you are thinking about making a move in property talk to the team at Madeleine Hicks Real Estate first.  They know the North West because it is their backyard.

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Kevin Turner Interviews Allie Coutts from Madeleine Hicks Real Estate About the Tender Process

Kevin:Last weekend's show, we were talking about the benefits of an auction. I had an email during the week from Madeleine Hicks' office. Madeleine, of course, no stranger to our show, has been on with us from time to time talking about the tender process. I thought that might make an interesting comparison between auction and tender, so joining me to talk about that, Allie Coutts, who is with Madeleine Hicks, of course. Allie, you have just done some recent tenders, I understand.
[00:00:30]

Allie Coutts:

Yes, we've been doing them for a few years now, since we've done a lot training on them. We've really seen the benefit to our vendors in following the tender process.
Kevin:Yeah, of course, tenders aren't all that common in residential, very common in commercial, of course. So what are the benefits as you see it for sellers in doing a tender, say over an auction?
Allie Coutts:

[00:01:00]

Firstly for an auction, you need at least two bidders that are actively engaged, and the highest bidder only needs to pay a little bit above whatever the underbidder has sent. Even though they may have had more money in their pocket or had seen greater values to the property, so that can be a bit tense for vendors who are waiting and watching all that activity.
 

[00:01:30]

With tender, it doesn't matter if there's only one interested party. That interested party, because they don't know what others are offering, must write down the figure that they are actually prepared to pay or where they really see value for the property.
Kevin:Do you find that buyers generally understand the tender process or do they have to be educated by you, because really they're going into a fairly blind situation, aren't they?` At least with an auction, the buyer can actually see how much interest there is there.
Allie Coutts:

[00:02:00]

 

 

 

 

[00:02:30]

Yes, true. I guess the only indicator for the buyer is the attendance at the open home, but yes, we do spend a great deal of time with buyers and educating. We have information packs that we share with them very readily, and also talk through the process. It's in the buyers best interest, too. It's actually worked quite nicely with first time buyers because I give them the tender pack, which includes the contract and encourage them to sit with their nearest and dear one, and then convey it to lawyers or their advisors to complete the contract and include the figure that they are able to do. It's actually done in the privacy of their own home, usually. Then they just submit their tender into the box, and if it's them that's selected then it's happy days.
Kevin:Well and good.
Allie Coutts:Yeah.
Kevin:

[00:03:00]

I guess there's another advantage with tender as well, that's one of the reasons why it's so popular with commercial properties or major development sites is that it doesn't have to be cash unconditional, which is what happens at an auction. It can actually have some conditions with it, can't it?
Allie Coutts:

 

 

[00:03:30]

Correct. Correct. Certainly, we encourage the unconditional, but there again, that's in the hands of the buyer as to what conditions they require. Then in the calm environment of the sellers home, they open up the tenders on a given time and date. They look through and compare figures, offers, and conditions or non-conditions and then make their choice accordingly.
Kevin:What happens in that process when you're sitting down with the owner and you're opening up all those tenders, if there's one there that's almost at the point where the seller will take it, do you have the ability then to go back and renegotiate with one or more of those tenders?
[00:04:00]

Allie Coutts:

 

Yes. It's actually ... We're working for the vendor, and so we will follow their instructions, but that is absolutely up to them. They don't have to accept any of them. They're under no pressure to do so. Usually they're on the market though because they're ready to move, so invariably, they will. In a couple of cases, the tenders that have been submitted were far below what the vendor was seeking, and so at that point, we just put a price on the property and continued to market it as normal.

[00:04:30]

 

 

 

 

[00:05:00]

We also run our tenders shorter than a typical auction campaign of four weeks. We generally run them for three, and in some cases where there's been great interest or where we know there will be a great deal of interest, we've even brought it down to four weeks. Again, that's actually up to vendors. If there's a particular buyer that is very keen to submit their offer early and to know prior to the due date, then they can do so, but it's not ... They can't put in multiple attempts.
Kevin:No, of course not.
Allie Coutts:But that is also an option that tenders can close early.
Kevin:There's an interesting insight for you into the world of tender. Helping us there, Allie Coutts, from Madeleine Hicks Real Estate. Allie, thank you very much for your time.
Allie Coutts:It's a pleasure, Kevin. Thank you.
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Impress and add value with paint

Adding a neImpress and add value with paintw coat of paint can improve the value of a property. That is the view of property expert and television presenter Phil Spencer.

Adding a new coat of paint can improve the value of a property. That is the view of property expert and television presenter Phil Spencer. For more than 15 years, he and Kirstie Allsopp have been finding and buying houses in the full glare of national television, as presenters first of Location, Location and later Relocation, Relocation in the UK. He eve brought an Australian version of Relocation, Relocation to these shores.

"If you are selling, you have to get buyers through the front door, which means you need to have the outside as spick and span as possible - cost $200-$2000, but could add $10,000". he said.

Impress and add value with paint

"If nothing else, your house should at least look better than your neighbours. Clean those dirty windows, clear the driveway, unblock the gutters."

The skillful use of colour can create illusions - pale hues reflect light and make small rooms seem larger, while dark colours can make large unwelcoming spaces feel cosier. A light colour on the ceiling - white is probably the best option - makes it seem higher, hallways or passages seem wider.

Cool colours such as blue, turquoise and blue greens are most effective in warm rooms that receive a great deal of sun. Warmer colours include the full range of reds shading into pink, orange and yellow. These colours also tend to be mentally stimulating and energising, making them best for rooms such as studies where creative work takes place.

Impress and add value with paint

When it comes to contracting a painter, Master Painters Association Queensland recommends people write out a list of what they want and hand it to each contractor to ensure everybody has the same starting point.

It is important to ensure each quote has a full scope of work as well as exclusions, what pre-painting, cleaning will be done and how, and the number of coats being applied along with the type of paint. The maximum amount of deposit for the work is set by law and a contract is important as it offers clear instructions and protects all parties in the event of a dispute.

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How much should your agent tell you when selling your property?

How much should your agent tell you when selling your property

 Communication is important in any relationship, no more so than with your real estate agent.

Why?

Because the more effectively you communicate with them, the more successful your whole  experience is likely to be. But if you haven’t sold property or dealt with an agent before it is difficult to know how often you will hear from them once your sale gets underway.

Besides helping you get the best possible price for your property your agent has a pretty crucial role in the sale process, which includes:

  • Liaising with you to set the best price to ensure a timely sale, based on property sales in the area over recent times.
  • Informing interested parties about your property details
  • Showing potential buyers your property via open houses or inspections
  • Relaying offers to you from potential buyers

The key to a happy and productive relationship with your agent is to make sure they know what you want from the relationship. You should look to:

Establish your expectations from the start

Often a lack of feedback from your agent can translate into a perceived lack of agent activity, but this often isn’t actually the case. That’s why setting expectations from day one is so important. Your agent should be fully briefed on your personal circumstances, time-frame for selling, how you want to be contacted and how often. After your property is listed a large part of your agent’s role is to keep you up to speed on developments as they happen.  And the best agents always put your interests first, and make you feel informed and supported throughout the sale process. Expect to be contacted with offers more often in a ‘hot’ market and vice versa in a slow one. They also need to know when to make the call if your property is not selling, and to let you know why and what needs to be done.

How much should your agent tell you when selling your property

The best agents always put your interests first, and make you feel informed and supported throughout the sale process

 

An agent should understand your time-frame and work to it

Your agent should be across the time frame you wish to sell in, and any personal circumstances which are relevant to this. If you are in a rush to sell and need to settle asap they can then adjust their marketing strategy with this in mind. If there is no particular urgency your agent knows that you are willing to hold out for a better price.

 

A good agent will liaise with you using your preferred mode of communication

How much should your agent tell you when selling your property

The more efficiently you communicate the more successful the relationship with your agent will be. To avoid any misunderstanding by setting this up from day one and clarify exactly how and when your agent communicates with you. Do you want them to call, message or email you? You also might like to meet them face-to-face for a chat. Clearly set out how often you want updates and when you want to meet.

The more efficiently you communicate the more successful the relationship with your agent will be

Your agent should get back to your queries within a reasonable time-frame

How much should your agent tell you when selling your property

Do bear in mind that your agent could be very busy and that you are unlikely to be their only client. They are likely to have multiple listings but should still be able to give you a typical timeframe for getting back to you. Agents should also let you know where you stand with any interested buyers and offers as they receive them.

Do estate agents have a code of conduct?

How much should your agent tell you when selling your property

Besides having a list of desirable traits, all agents must have a working knowledge of the relevant regulations and legislation pertaining to their profession. They learn this as part of their training to be real estate agents.

In addition agent associations like the Real Estate Institute of Australia (REIA) have a code of conduct, which encourages members to, ‘exercise skill, care, and diligence in the conduct of the profession”, and to, ‘complete all work on behalf of the client as soon as is reasonably possible.’ They are also obliged to act in the best interest of their clients.

 

We have an important guide for you,

"The 11 Critical Questions Every Seller Needs To Ask When Hiring A Real Estate Agent"

Download it here.

 

With thanks to open agent

 

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9 great things about granny flats

5 great things about granny flats

They might not seem like the most glamorous of property extensions, but granny flats are becoming increasingly popular among renters, homeowners and investors.

Here are five reasons why you might want to consider investing in one!

Read more