National Rental Affordability Scheme (NRAS)

NATIONAL RENTAL AFFORDABILITY SCHEME (NRAS)

NRAS. These are four letters that you will be hearing a lot of in the very near future when looking into investing in property.

The Federal Government has introduced a property rental scheme to encourage investors into the market through offering tax benefits that can save you thousands of dollars.

The scheme which was introduced back in 2008 and has a life span currently of 10 years and can offer up to $9,500 tax free. The properties available are everyday properties offered by a number of builders subject to them receiving permission by the Government to be part of the scheme. They will be new house and land packages and spread throughout Adelaide.

These properties are designed to target moderate income earners and apart from that, the property can be run by any approved property manager.

Ok what’s the catch you say to get the money from the Government?
Well there aren’t too many actually however the main one is that you will have to give the eligible tenant 20% discount on the normal market value of the rent.

Example

If a property would normally get $300 per week then you must charge no more than $240 per week and in return you will get back roughly $9,500 less a management fee of around $1000 = $8500.

So give away $60 per week and get back $163 which means you have around $100 more in your pocket. These figures are based on you borrowing 100% of the purchase price and may change depending on your funding method.

This could mean that the property you buy could in fact be positively geared and cost you no money out of your pocket.

The incentive is also indexed at CPI and is adjusted each year and the rent can also only be increased to the tenant once per year.

Downside obviously is that you are out of pocket during the year until you get your cheque from the scheme in the first year that could hurt some people that don’t have the ability to cover the shortfall.

If during the 10 years you decide to leave the scheme or sell the property outside of the scheme you will need to give the scheme at least 90 days notice and there will be an exit fee which is based on 7.5% of the amount of years remaining by the amount still to be paid to you or $2200 whichever is the greater. You can also sell the property with the NRAS attached.

Eligible tenants

Tenants must meet the eligibility criteria however it is estimated that at least 1.5 million Australians will be eligible.

Single income earners maximum = $41,514

Couples with no children = $57,391

Couples with 1 child = $71,159

Couples with 2 children = $84,927

Couples with 3 or more children = $98,695
Total Investment Property Solutions are fortunate enough to be part of offering these properties through one of it’s builders and we would love to tell you more.

Unfortunately there will only be a limited amount of these properties available and the demand is naturally going to be high, so if you are interested in finding out more please give us a call to make a time for us to pop and discuss the finer details.
Happy investing,

Cheers Fred

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