NRAS SCHEME SEMINAR PRESENTATION_May2012

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Welcome Investing in Property Information Evening Brought to you by NRAS Specialists Motion Property Solutions

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Understanding the National Rental Affordability Scheme (NRAS) A Residential Investment Opportunity Supported By The Australian Government

NRAS : 

NRAS The benefits of purchasing an NRAS property Understand how the Government will pay you tax free incentives for the next 10 years to invest in new Melbourne property Be presented with some of Melbourne's best NRAS opportunities.

What is NRAS?: 

What is NRAS? Introduced in 2008 by Federal and State Governments Prompted by the rental crisis Designed to give rental relief TAX FREE incentives to investors

NRAS – how it works: 

NRAS – how it works Government grants approved providers NRAS accreditations

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Developer applies through approved provider for an allocation of NRAS licenses which are then allocated to their project

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Purchase is made by private investors

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Dwellings offered to qualified tenants at 80% of market rent

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Indexed annual tax free incentives of $9,981 are provided for 10 years.

NRAS Payments: 

NRAS Payments The annual tax free incentive is currently $9,981 and is indexed. Comprising: An Australian Government contribution of $7,486 (paid as a tax offset) and A State or Territory Government cash contribution of $2,495 .

Additional Tax Benefits: 

Additional Tax Benefits All standard tax benefits of negative gearing apply

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Hypothetical NRAS Calculation Non NRAS NRAS Rental Income (350/Week) $ 18,200.00 $ 14,560.00 *80% Market Rate Rental Expenses Council Rates $ 1,200.00 $ 1,200.00 Property Management $ 1,472.00 $ 2,163.00 Insurance $ 600.00 $ 600.00 Interest $ 19,000.00 $ 19,000.00 Repairs $ 300.00 $ 300.00 Water rates $ 640.00 $ 640.00 Total Expenses $ (23,212.00) $ ( 23,903.00) Loss - Taxable $ ( 5,012.00) $ ( 9,343.00) Add back depreciation $ 1,925.00 $ 1,925.00 Based on depreciation of $5,000 NRAS - Incentive $ - $ 9,981.00 * Tax Free Cash Surplus $ (3,087.00 ) $ 2,563.00 Add estimated tax rebate on loss $ 1,929.00 $ 3,597.00 Annual cash position $ (1,158.00) $ 6,160.00 Weekly cash position $ ( 22.27) $ 118.46 *using a marginal tax rate of 38.5% Disclaimer: This calculation of National Rental Affordability Scheme (NRAS) is for illustrative purposes only. It doesn’t take into account your or and any interested investor’s specific objectives, intentions or financial position. No person should act on the basis of any information contained herein without considering or/and taking professional investment advice. The report doesn’t consider all factors that would constitute your financial tax position; factors include but not limited to, other income, deductions, offsets and surcharges. Motion Property accept no responsibility for any error or omission, or advice expressed herein, nor any loss occasioned there from.

Approved Dwellings: 

Approved Dwellings Need to be: In Government approved locations Newly constructed

Locations: 

Locations High underlying demand for rental accommodation; Urban growth areas , with forecast strong population growth Dwellings are in locations that demonstrate:

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Examples of Investment Opportunities (Approved Dwellings)

NRAS Leases: 

NRAS Leases Standard Residential Tenancies Act applies

NRAS Properties: 

NRAS Properties Properties must be: Managed by a qualified property manager Leased to qualified tenants

The Details: 

The Details NRAS terms require that: Properties must be approved NRAS dwellings Must be leased to an eligible tenant Must be Managed by an approved NRAS provider

Eligible Tenants : 

Eligible Tenants Key workers across all industries: Examples are: Public service Police Teachers Nurses Fireman Hospitality Retail Young professionals Young families

Eligible Tenants: 

Eligible Tenants Must be able to pay 80% of the market rent Need to be suitably employed and have stable income sources Have good tenant history NRAS tenants are thoroughly qualified by the tenancy manager for Suitability for the dwelling Ability to pay the rental income Must earn income not exceeding the set income limits (see next table)

Tenants Criteria : 

Tenants Criteria Income levels What are the income levels for NRAS tenants? Household Type Entry Income level ($) Upper Income Level to Maintain Eligibility ($) One Adult 44,128 55,160 Two Adults 61,006 76,258 Couple with 1 Child 75,641 94,553 Couple with 2 Children 90,277 112,847 Couple with 3 Children 104,913 131,141 Tenants for NRAS properties are selected by investors and their tenancy managers. Tenancy manager review tenancy applications and maintain waiting list for NRAS homes but importantly the final decision to choose a tenant is always made by the investor.

Market Rent: 

Market Rent NRAS Rent is set at 80% of the assessed market rent for the property. Market rent is independently assessed and set by a qualified valuer in Years 1, 4 and 7 of the NRAS period. Intervening years rent is indexed. Income from the NRAS property will continue to increase in line with movements in the general property rental market.

NRAS Time Constraint: 

NRAS Time Constraint Time to take up this incentive is limited to June 30 th 2014 (subject to availability) A finite amount of licences have been allocated

The Next Step: 

What are my options? - Seek financial advice on borrowing capacity. Book a cost free and obligation free one on one meeting to discuss the right property for you. Arrange a time to learn more about the Government NRAS Scheme. The Next Step

Thank you for your attendance today. We welcome any questions; a representative of Motion Property will be available to speak with after the presentation. We welcome appointment to discuss the information presented tonight in further detail and to discuss investment properties that may be of interest to you.: 

Thank you for your attendance today. We welcome any questions; a representative of Motion Property will be available to speak with after the presentation. We welcome appointment to discuss the information presented tonight in further detail and to discuss investment properties that may be of interest to you. Disclaimer: The information contained in this communication is of a general nature only and is not intended to be specific advice – it is provided for general guidance only. No warranty is provided in relation to the accuracy or reliability of any of the information contained in this communication. No party should act, or fail to act, based on the information contained herein. Before making a decision to invest or purchase property one should seek independent and qualified financial advice.