IntroductionLelde Smits:This week we conclude a series looking at capital city suburbs with the highest rental growth for units in Australia, with a focus on two suburbs in Adelaide. In our interview, we speak with Andrew Tunbridge from Ponton Valuations and Consultancy. And in our tax tip we look at whether home owners can claim Body Corporate Fees as a tax deduction.
News Shraysi Tandon:RP Data’s weekly auction data collection shows that auctions are growing in popularity and that auctions undertaken this year have been greater than last year. This is because auctions generally achieve much greater exposure than a private treaty sale as vendors are often willing to spend more money on advertising. It is also often seen as the best way to achieve top dollar. As the property market continues to perform well over the last 12 months, auctions simultaneously continue to be a popular method of sale. However, property experts suggest vendors that engage in auctions need to be realistic in their reserve prices and have a backup plan in case the auction is unsuccessful. This would involve direct negotiations with the highest bidder or other bidders and potentially a secondary marketing campaign focused on a private treaty or tender sale. RP Data suggests that vendors must choose their method of sale carefully and look to differentiate their property from the rest.
Suburb in Focus This week we conclude our series looking at capital city suburbs with the highest rental growth for units in Australia, with a focus on two suburbs in Adelaide.
First let’s look at the unit market in Elizabeth Downs, a suburb located 30 kilometers north east of Adelaide. With a population of 5,058 in the last census, Elizabeth Downs is an outer suburb of Adelaide, almost 40 minutes drive down Main North Road to the city’s centre. Originally rural land, the suburb is now residential and has grown to accommodate new residents working in neighbouring suburbs at major employers including Holden and the Defence Science Technology Organisation. Elizabeth Downs is well catered for with schools and play grounds as well as a number of parks that frame the suburb. The sports focus continues at the Elizabeth oval, located in the neighbouring suburb Elizabeth, which also hosts the state’s third largest shopping centre. The Elizabeth shopping centre, just next to the Elizabeth Interchange where frequent and direct train and bus services travel south to Adelaide or north to Gawler. Recreational activities have an outdoors focus in Elizabeth Downs, from walking along the Craigie Creek, or a drive east to escape to some of South Australia’s best wineries.
According to figures from RP Data, Elizabeth Downs recorded the largest increase in unit rents in South Australia for the year to 30 June, rising 11.8 per cent from $170 per week last year, to $190 per week in 2010. Over the same period 43 rentals were advertised, down from 50 the year before. The median price of a unit in Elizabeth Downs is $147,750.
Our next suburb is the unit market in Daw Park, located 8.4 kilometers south of Adelaide’s CBD. With a population of 2,345 in the last census, Daw Park is a largely residential suburb, spotted with small reserves and bungalow homes that rest on broad tree-lined streets. Truly an example of why Adelaide has been nick-named the ‘twenty minute city’, the suburb is bordered by both South Road and Goodwood Road. A direct ride north will take you past the Royal Adelaide Showground straight into the central business district. Alternatively, a short drive west offers an escape to South Australian beaches. Further south east the charming Adelaide Hills wrap around the city. Daw Park is well serviced with public transport, including a rail line in neighboring suburb Melrose Park, where the Castle Plaza Shopping Centre provides the neighborhood with a range of specialty stores. RP Data figures reveal that the median rental for units in Daw Park increased by 11.3 per cent last year, from $243 per week to $270 per week for the year to 30 June 2010. Over the same period 27 properties were advertised, down from 32 the year before. The median price of a unit in Daw Park is $280,100.
InterviewThis week we speak with Andrew Turnbridge from Ponton Valuations and Consultancy.
Tax Tip The Tax Tip of the week is from Depreciator - the Tax Depreciation Schedule specialists.
Many home owners are unsure as to whether or not they can claim Body Corporate Fees as a tax deduction. This depends on the type of Body Corporate Fees charged. Generally there are three types of Body Corporate charges. These include an Administration Levy, General Purpose Sinking Fund Levy and Special Purpose Levy.The Australian Tax Office considers the expenses are deductible to the home owner based on what the fees are ultimately spent on. That is either a capital item or a deductible item. Since it is generally difficult for the owner to figure out what was spent on what, the ATO have accepted three general rules:
Administration Fund Levies that are for the general running expenses of the complex are deductible when incurred. Sinking Fund Levies that are imposed on a regular basis are deductible and the owner does not need to differentiate on what happens to the funds; that is whether the funds were spent on deductible expenditure or capital expenditure. Special Purpose Levies must be traced to see what the actual funds raised were used for. If they were used to repaint the entire complex or replace the entire driveway, they would be capital expenses and thus not deductible.
From an owners tax perspective, it would be better for the strata body to collect General Purpose Sinking Fund Levies which are tax deductible... rather than waiting until something major is required to impose a Special Purpose Levy, which IF used for a capital improvement, would not be deductible.
As always, do remember to consult with a tax accountant or tax professional before making any tax related decisions.
