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The National Rental Affordability Scheme (NRAS) was introduced by the Federal Government in July 2008 to encourage construction of new dwellings in Australia.
NRAS aims to address the shortage of affordable rental housing by offering tax free incentives to build and rent new homes to low and moderate income households such as nurses and police officers at a rate that is at least 20% below the market rate.
The Incentives
The Government incentives are either a Refundable Tax Offset or non assessable non exempt income. This means that the Government incentives are tax free. It is paid annually for up to ten years.
Incentives are indexed annually at the housing rental component of the CPI. The current NRAS year (2012/2013) incentives are $9,981
The Property
The Federal and State Governments have selected the blocks of land that the builders will build the affordable housing on.
These are normal properties that any investor would build but they have the NRAS product attached to them. The location of these properties are anywhere in Australia.
The Tenants
With an NRAS property the tenant has to go through a far more stringent qualification process and are required to to meet the NRAS Income Eligibility Limits which are reviewed and updated annually in line with the NRAS year.
NRAS dwellings must be rented to eligible tenants who meet the NRAS income level requirements, which are based on the tenant’s gross income.
The income limits for NRAS tenants tend to be key and essential service workers, for example, childcare workers, nurses, police officers, paramedics and firefighters.
The Loan
Loan Ave loans for the purchase, refinance or construction of these investment properties.
The property must be leased or managed to an affordable housing consortium approved by Loan Ave and their funders and which permits subsequent purchaser to not participate in NRAS and for security property to be unencumbered by the NRAS scheme.
Subject to terms and conditions Loan Ave can consider loan to value ratios (LVR’s) up to 90% of the value of the house plus capitalise the mortgage insurance premium.
* Terms conditions & lending criteria applies. Full details of terms & conditions available upon application