Genuine first home buyers who qualify under the first home test are currently entitled to a NSW government grant of $15,000 in calendar 2013 and $10,000 in calendar 2014. In addition to this, full or partial stamp duty concessions apply. The ceiling for receiving the full stamp duty concession is $550,000 and for partial concessions it is $650,000, at which point the grant also cuts out. First home buyers are characterised by those entering the property market for the first time, usually working full time and often contemplating or starting a family. To be entitled to the grant, the property of their choice must be brand new. First home buyers often see their first property as a means of accessing the first rung on the property ladder and are reconciled to spending at least 7-8 years in their first home (usually a new unit) before selling the property and applying the sales proceeds towards the purchase of a subsequent (usually larger) property.

UP Marketing is an experienced sales and marketing organisation with an in-depth knowledge of buyer’s requirements and all buying processes. Up marketing approaches the sales function from the buyer’s perspective and address these 5 pillars in all aspects of their dealings with the public. In addition to our extensive research activities, up marketing deals daily with vendors, valuers, lenders, lawyers, architects, property management issues, accountants and advisors as well a string of vendor’s and lessor’s suppliers, consultants and associated marketing support organisations (e.G. Brochures, photographers, advertisers, distributors etc). From dealing with our broad general categories of buyer groups, we have observed the following (general) profiles and requirements.

We hold the view that in a climate of ever rising rents, the gap between the costs of servicing a mortgage at low interest entry rates and paying ever rising rents over a given period has eroded to the point where it is now makes more economic sense to purchase, even if the asset is only held for 3-4 years (i.E. With the grant and stamp duty paid by the govt) and then sell the first home (free of capital gains tax), to facilitate the deposit for a larger family home, where the requirement for “new” no longer applies.

UP Marketing is obliged to issue a standard statutory warning associated with all commission earning real estate agents and the giving of advice. The information contained herein is general information only (i.E. A general guide for you to talk to your accountant or investment advisor about) and therefore does not and cannot address each individual’s personal circumstances, their personal objectives and their personal situation and needs.

Downsizers (including second and subsequent home buyers)-capital gains tax exemptions apply if a purchaser chooses to keep their larger family home and rent it out, after buying another (usually smaller) property and moving into that second property. They are allowed to nominate the family home as their principal and primary residence & treat it as an investment property, claiming the mortgage and other costs like rates and insurance etc off their tax as normal expenses and declaring the rental income. What makes this different is the fact that they can enjoy the capital gain in the larger family home and not have to pay any capital gains tax upon its disposal. The rules state that you must move back into the property every 6 years (for 3 months) but over a 12 year period the property will have enjoyed 11 years and 9 months worth of rising rental income and significant tax free capital growth, which might be sufficient to retire the debt on the unit over the same term. The costs of acquiring and establishing a large family home are significant and the first half of a long mortgage contract is usually weighted towards paying off a disproportionate amount of interest, with a much faster reduction in the principal over the last half of the mortgage term. The motivation to retain the family home is extremely compelling.

UP Marketing contend that it is often more beneficial to keep the family home (if it is relatively easy to maintain by tenants etc,) enjoy what is expected to be significant capital gains as you prepare for your retirement, and apply the surplus rent from your larger family home towards the mortgage on the new unit purchase. The cost of acquiring the unit and the stamp duty (stamp duty is around 4% of the value of the unit) is usually met by a loan against the family home, so the unit purchaser does not need any funds of their own. The unit will also appreciate over the longer term and capital gains tax will apply (at a much smaller level of impost, and often calculated at a time after you or your spouse have ceased work, further mitigating the tax). In some cases, a small payg tax adjustment will be required to be paid on positively geared rental income from the family home (less the costs of the mortgage etc on the unit) and land tax may apply if the value of the unimproved land on which your family home stands is over $376,000 (1.6% pa for every dollar above the valuer generals valuation). For example, if the land content of your home (as shown on your council rates)is $450,000, then your annual land tax bill would be $1,184 (a tax deductible expense). Our experience is that after receiving rents, paying remaining mortgage payments (even at the standard rate, which is usually increased to finish it quicker) most down-\sizers are cash flow positive and can apply the surplus to their new unit mortgage or salary sacrifice into their superannuation. (we encourage you to do the numbers yourself or call us for assistance. (we can then help you to find an accountant or advisor if you so wish)

UP Marketing is seeing an increasing number of people in their late forties through to their early sixties downsizing into smaller units. This is usually the case after their children leave home or are old enough to do so. Such a plan allows the unit buyers to enjoy a more purposeful life (i.E. Not spending week-ends mowing lawns and cleaning pools that nobody uses)as well as giving these purchasers a better opportunity to use their income in a more productive and purposeful manner.

UP Marketing is obliged to issue a standard statutory warning associated with all commission earning real estate agents and the giving of advice. The information contained herein is general information only (i.E. A general guide for you to talk to your accountant or investment advisor about) and therefore does not and cannot address each individual’s personal circumstances, their personal objectives and their personal situation and needs.

Investors-the housing market in most Australian capital cities is on the mend but has long ceased performing predictably. This results from the broader changing financial landscape, affected principally by macro economics (such as factors like the GFC and its global flow on affects) and secondly by domestic economics (affordability, interest rates, supply and demand factors and the impacts of trade on jobs, saving and spending, such as the two speed economy and federal government policy). Whilst the world’s economies are slowly on the mend and Australia is to some extent insulated from these world events, a precautionary approach is still required. UP Marketing holds the following view of the economic landscape during 2013 and beyond.