There has been significant interest from Self Managed Superannuation Fund (“SMSF”) investors in the national rental affordability scheme (“NRAS”), which is designed to encourage large-scale investment in affordable housing. The NRAS offers tax and cash incentives to providers of new dwellings on the condition that they are rented to low- and moderate-income households at 20% below market rates. NRAS offers annual incentives for a period of 10 years.
NRAS has been promoted heavily in recent years with advertisements taking advantage of the $100,000 ‘financial incentive’ if the property is held over 10 years. However, NRAS has been dealt a severe blow with the 2014 budget announcement which many SMSF property advisors were expecting.
Ivan Filipovic from Redwood Advisory says “There’s good NRAS and bad NRAS, SMSF Investors always need to be cautious when presented with claims which appear too good to be true and should do their due diligence on the property including an assessment of price, location and yield, before investing.”
The Abbott Government will achieve savings of $235.2 million over three years by not proceeding with Round 5 of NRAS.
Funding for incentives from earlier rounds that are uncontracted or not used within agreed timeframes will be returned to the Budget. Funding for tenanted NRAS properties is not affected.
So that’s the end of NRAS….for now, lobbying may occur however it may fall on a deaf ear from the Abbott Government.
Disclaimer – The content has been prepared without taking account of the objectives, financial situation or needs of a particular individual and does not constitute financial product advice.