How NRAS can supercharge YOUR rental returns!
In Brief:
The National Rental Affordability Scheme aims to address Australia’s affordable housing shortages by delivering significant tax free incentives to investors who provide a discounted rent to ‘everyday Australians’.
What is the National Rental Affordability Scheme (NRAS)
NRAS is a long term commitment by the Australian Government to invest in affordable rental housing. The Scheme seeks to address the shortage of affordable rental housing by offering financial incentives to build new dwellings and subsequently rent them for at least 20% below market rate to low and moderate income households.
The primary focus of NRAS is to:
- increase the supply of affordable rental dwellings;
- reduce rental costs for low to moderate income households; and
- encourage large scale investment and delivery of affordable housing.
The National Rental Affordability Scheme Act 2008 and the National Rental Affordability Scheme Regulations 2008 (the Act) passed the Senate in November 2008. The Federal Government has contributed $4.5 billion and State Governments $1.5 billion towards NRAS to create up to 50,000 high quality new affordable dwellings across Australia.
NRAS payments are tax free incentives available each year until mid 2026 to owners of NRAS Approved Properties.
For an Investor to be eligible for the Government Incentives, NRAS requires you to rent your Approved NRAS Property to an Eligible Tenant for at least 20% below the market rate.
What return can I expect?
The tax free benefit to investors for the 19/20 FY is $11,248.09. Even after rental discount is taken into account, it provides a significantly higher rental return after tax (than the equivalent residential property). Using current reasonable market assumptions, the abbreviated cashflow below demonstrates this:
As you can see, after tax, the NRAS provides nearly 9 times the cashflow of the exact same property not in the scheme. It is no wonder why the employees at WAI Group also own NRAS properties!
Some of the other great benefits NRAS owners have experienced are:
- Shorter vacancy rates due to increased demand for cheaper rent
- Longer tenancy periods as it will be far more expensive to move “next door”
- Reduced tax liability whilst providing more money in their back pocket
WAI Group are the NRAS professionals having been involved in the scheme since its inception 12 years ago! We have recently acquired a number of NRAS credits to apply to brand new properties in the Perth metro area exclusively for our clients! CLICK HERE for more information, or get in touch with us today to find out how NRAS can benefit you!