The NRAS property scheme is a government incentive. It stands for National Rental Affordability Scheme (NRAS).
A sector of Individuals, Couples or Families that have good jobs but struggle with Rental Affordability now have the ability to rent the style of accommodation that suits their needs, but at a discount. The government is making rent more affordable under this scheme. The incentive to renters is a rental discount of 20%. To compensate you as the landlord, the government provides a Tax Credit of $9,524 per year linked to Rental CPI going forward over a period of 10 years. This Tax Credit could amount to over $100,000 over the next 10 years.
Only newly built residences meeting set criteria can qualify as NRAS properties under this scheme. Criteria for inclusion as a NRAS property are proximity to schools, public transport and location. The Tax Credit thus increases the rental yield on NRAS properties.
Example on a rental income of say $350pw
- Qualifies the tenant with a $70 discount (20%)
- The tax credit of $9,524 divided by 52 weeks = $183 pw
- The difference in your pocket in this example = $113 pw surplus
Utilising NRAS is a good fit for SMSF’s wishing to enter the property market. Most properties would be positively geared right from the start. To see NRAS explained in more detail, click here.
To visit the government website on this scheme, click here.
To see NRAS properties available for purchase with your SMSF, click here.
Remember, Superannuation Warehouse will set up the SMSF first and then put into place a Bare Trust and Corporate Trustee structure. It is important to have these structures in place before the property purchase to ensure stamp duty is not levied twice.
To see the typical structures and processes for SMSF property investment, click here .
Lastly, there are many property spruikers operating in the NRAS area. There are big commissions involved in signing clients up into these schemes. The banks are ware of these schemes so it can be difficult to get finance.