In our series looking at capital city suburbs with the longest hold periods, we take a look at two suburbs in Hobart. And in our tax tip of the week we look at negative gearing.
News
In a surprise move the Reserve Bank of Australia has decided to leave interest rates unchanged at 4.5 per cent at its October meeting. The RBA cited subdued credit growth and little movement in asset values as being among the reasons behind the decision. News was well received by the Housing Industry Association which had earlier cautioned a premature hiking of interest rates would exacerbate the impending decline in new home building. The warning came following data that building approvals eased 4.7 per cent in August and 12 per cent lower for the three months to August and the sixth fall in eight months. Correlating with the decline, the Australian Industry Group/Commonwealth Bank performance of services index sank 1.9 points in September to 45.6, the eighth time this year that the index has delivered a read below 50- separating contraction from expansion. The RBA’s move away from a rate rise also aligns with data from RP Data-Rismark, its Home Value Index for August showed a fall in capital city home values, falling 0.2 per cent in seasonally adjusted terms, while the ‘Rest of State’ markets reported flat growth. In other news, the latest HIA/Jeld-Wen new home sales report revealed the fourth consecutive month of declines, new homes sold slipping 2.6 per cent in August with sales in the three months to August down 11 per cent on the same time last year. HIA says the renewed weakness in new housing sales highlights an opportunity to act to create a more flexible and less costly regulatory environment, than the one currently pushing people away.
Suburb in Focus In our suburb in focus, we continue a series looking at suburbs with the longest hold periods in capital cities around Australia. This week we look at two suburbs in Hobart.
First let’s look at the house market in Glebe, located just over a kilometre north of Hobart’s CBD. According to figures from RP Data, properties in Glebe are held for almost 10 years, the longest hold period of any suburb in Hobart. Glebe is a small suburb with a population of just 597 in the last census. Glebe is bordered by the Royal Tasmanian Botanical Gardens home to a number of historic plant collections and large number of significant trees. Glebe is also next to the Hobart Aquatic Centre and Queens Domain, a hilly bushland area. The suburb contains some great examples of Victorian and Federation style wooden terrace houses. The Tasman Highway runs past Glebe which connects Tasmania’s major cities Hobart and Launceston.
Turning to the figures, the median house price in Glebe in the year to May 2010 was $485,000. The average hold period for a house in the suburb is 9.8 years. 13 properties were sold in Glebe for the 12 month period.
Our next suburb is the house market in Mount Nelson, located just over a kilometre south of Hobart’s CBD. RP Data figures reveal that properties in Mount Nelson are held, on average, just under 9 years before being sold. With a population of 2,347 Mount Nelson as the name suggests is located on a mountain. One of the oldest and most prestigious suburbs in Hobart, Mount Nelson is accessed by Nelson Road, famously known for its ‘bends’ or very sharp corners as it winds its way up the mountain. The suburb has a general store, pharmacy, recreational sports grounds, a medical centre and a local bus which runs up and down the mountain every 30 minutes connecting the suburb to Hobart city.
Taking a look at the figures, the median house price in Mount Nelson for the year to May 2010 was $450,000. The average hold period for a property in the suburb was 8.7 years with 31 units sold in the 12 month period.
Tax TipAnd now to the Tax Tip of the week from Depreciator - the Tax Depreciation Schedule specialists.
This week we take a look at negative gearing and how this is used as a tool to reduce your overall taxable income. A rental property is considered to be negatively geared if it is purchased with borrowed funds and the net rental income, after deducting other expenses, is less than the interest on the borrowings.
The overall taxation result of a negatively geared property is that a net rental loss arises. In this instance you can claim a deduction for the full amount of rental expenses against your rental and other income, like your salary, when you complete your tax return for the relevant income year. Where other income is not sufficient to absorb the loss it is carried forward to the next tax year.
If by negatively gearing a rental property, the rental expenses you claim in your tax return would result in a tax refund, you may reduce your quarterly payments in your PAYG instalments to better match your year-end tax liability.
And as always, remember to consult with a tax accountant or tax professional before making any tax related decisions.
