Real Estate Newsletter – Winter 2024

Financial Management For Those We Love

It is a wonderful privilege to live in a society where we may plan investments which protect ourselves and those we love against future adversity: where passive income may be created to meet the needs of our maturing years: and the ability to assist children and grandchildren in achieving education, or a home which may otherwise not be available to them.

This does not happen by accident! It is the result of careful planning – by people who have deferred personal gratification in favour of investments which ultimately provide these rewards and privileges.
The creation and management of capital, calls for a deep understanding – of that which may be retained as a form of investment for ongoing passive income, and that which may be spent…  and is gone from our control forever.

Capital creates that additional income which is beyond our reward for personal effort.

Its retention, growth and ongoing management calls for dedicated study and investment experimentation.

This newsletter has a bias in favour of property as a form of investment. Property takes many forms and is such an integral part of our lives. We focus on the many aspects of your property portfolio.

The management of assets for tax minimisation is referenced in this edition.

Many are well advanced and sophisticated in their asset management, but even the most astute may need prompting as to the multitude of options which may diminish, increase, or defer, the payment of taxes: taxes which empower our several tiers of government, but which impact our own empowerment in connection with those we love, or the causes which give us greatest satisfaction.

Tax Effect on Year End Sales

We sought commentary from our three most senior sales and marketing consultants, and each had the same story, but of course with different expressions.

The Story

We have had an amazing year of sales, but they have currently almost ceased as vendors of property are choosing not to sell until the new tax year arrives. Shortage of stock is pushing prices very high as vendors are choosing to avoid profit taking.

Simply, vendors are refusing to earn any extra money in this tax year.

All of our consultants are holding significant numbers of marketing instructions (property listings), which are not to be launched until July.

The price of both commercial and residential property on today’s market is historically HIGH and the question addressed by all… “Is there a benefit to sell now, making cash available for other opportunities which may occur in the new FISCAL Year… or should we sit and wait further?”

The following summary points should be noted by vendors who have options.

If the decision is to sell, then the following commentary may be helpful.

1. State Stamp Duty

There is no stamp duty paid on commercial property transactions in South Australia.

This means you may buy and sell according to market opportunities without the impost of transaction taxes. This provides an amazing “free enterprise” expression.

If you have been deferring a decision for a more convenient time… that time may be NOW while prices are still at record high levels.

South Australia offers a sense of freedom in buying and selling decisions… sometimes significant profits are realized… Sometimes capital is released from an asset that is dormant in a lazy capital trap. Capital released may create a new freedom to invest in something with a better future or attracting higher rental income.

2. Federal Tax Implications

Be careful in assessing total tax implications!

Sometimes people get on the bandwagon of Stamp Duty Free, only to meet a larger Income Tax Assessment, because the land being sold may attract a Capital Gain with ATO imposts.

Alternately, a loss which has been sitting behind a property with a poor future, may have incurred tax losses just awaiting their realisation. This tax loss may be helpful in reducing this year’s assessable income tax… AND even more helpful in providing cash for an alternate investment going forward… but it may take some courage!

3. Date of Transaction – is Important

It is important to note that the value of a sale is brought to account at the date of Contract. Settlement may not occur until the new year, but the date of contract is the relevant factor.

You may create profits or losses during a given tax year without any money changing hands other than the deposit paid on the contract of sale.

In terms of asset management and tax planning this may be beneficial… BUT plan… and take professional advice.

4. Land Tax

This is another event which is set in concrete at midnight on the 30th of June each year. Transactions registered against the name of a specific owner are set at that date and are not adjusted at the time of a subsequent settlement like Council Rates and the like.

Land tax escalates according to the value of each individual portfolio.

Other people who do not have a Land Tax problem may be happy to negotiate to their own advantage by agreeing to buy and settle before the 30th June deadline.

Our staff are waiting to assist if this is important to you.

Women in Property

Commercial Management

A comment by Karen Andrews, CEO and Director:

“I’ve been in property for almost 40 years and have never deliberately favoured women for any particular role.

“Over many years, the women depicted below have gravitated to the peak of their profession and I can only assume, talking to landlords and tenants, that they are doing something very special in their respective commercial management roles.

“I note that I am the ninth lady linked to this department, having spent many years as a commercial sales and management specialist.

“I wonder if this sets some kind of a record for women involved in commercial management in one agency in SA?”

Karen Andrews
Director – CEO

Claire Britton comments:

“When Karen drew my attention to the fact that our commercial management department comprised of nine ladies, including herself, I looked at every member of staff with great pride as to their effectiveness.

“Our growth in new landlord numbers and in new properties under management must mean that our ladies are performing extremely well.

“Our role is to protect the asset of each landlord and show empathy to every commercial tenant as they try to grow their businesses in commercial property under our care.”

Claire Britton
Head of the Commercial Department

Staff Commentary

Grace Centofanti, who is one of our Executive Commercial Property Managers, contributed the following:

“Retail tenants in some sectors are having difficulty meeting their monthly rental payments.

“Maybe the buying public are hurting more than the government realises.

“As a Commercial Property Manager, I am having to spend more time counselling and encouraging tenants than is normal.

“I know this does not apply to light industry and other clients, but I “feel” with their current difficulties.

“The state government, or someone in authority, should take action with local planning departments to enable quicker decisions for change of land use.

“It can take up to 90 days for a minor change to the use of a property, and by then the landlord has suffered loss of rent, and the tenant may have found alternate accommodation.

“Please reduce red tape!

“Landlords in the retail sector should be aware of the current stresses and cautious when it comes to rental reviews.”

Grace Centofanti
Executive Commercial Property Manager

Leasing Advocates

There appears to be a sudden rise in the services of Leasing Advocates who charge tenants for commentary on new lease proposals. Often, the commentary is minimal and may delay the leasing process. It also adds to the tenant’s initial costs.

It seems that people’s fear of businesspersons without integrity has become costly and we recommend you seek advice from agents that you trust.

Market Wrap

1. The price of development land is very high. If you own land which is not producing income you may choose to turn it into cash, whilst conditions are good.

2. Residential property is an owner occupier’s market. Residential investors face land tax problems, high interest, and many choose early retirement with alternate investments… the market is currently away from investors.

3. Commercial vacancies are stable with every vacancy being filled as quickly as they occur – with the cautionary note as to some forms of retail leasing.

4. All prices are very high, and we rejoice with vendors who took our advice over many years to invest in property. Ultimately, price increases will adjust, but demand will grow over the years ahead.

Staff – Activities

External to the Office

The integrity of an organisation is dependent on the integrity of its staff.

In future, we will introduce you to some of our staff and their activities which are external to their work environment.

We believe this extra knowledge will assist as our clients know a little more about those with whom they do business… a little more about their real-life integrity.

Don Datu

Don Datu (on the right) joined this company seven years ago as an internal accountant. Already a CPA at the time of joining, Don has since become a Fellow of the Society of CPAs. He also holds a Master’s in Business Administration and contributes significantly to both our company and its clients.

Don migrated to Australia to benefit his children, and we are proud of his achievements.

Lou Whitelock

Congratulations on your 200th game!

Lou joined his footy club in 2013. He served as captain for five years and assisted in the club winning three premierships.

During the week, Lou shows the same skill and integrity as a Commercial Property Executive with this company.

We are proud of you Lou – you are made of good material!

Written By L.M. (Lin) Andrews

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