property warrants
When property warrants were first realised last year there were some problems. Firstly there were some grey areas in terms of the tax departnment. They have now been resolved. The other problem was the cost. When they came out the establishment fee was 5%. So given that an apartment is at least $400,000 that represents $20,000, which is a lot. However that has now come down to 1.5%. Currently Quantum are the only group marketing these. However I am sure that other groups especially the banks will start to promote property warrants.
This has come about due to government policy encouraging people to save money. Is it for everyone. Maybe maybe not.
Consider that you are 50 with at least $200,000 in a self managed super fund, you can use the 20-30% deposit to acquire the property through your super fund. You can salary sacrifice the entire payment meaning that it is 100% deducatable. Once you turn 60 the property can be sold and no capital gains tax is payable. This may mean that many people who currently have not invested in property may now be able to do so and take advantage of capital growth without capital gains tax.
To do this you would need at least $100,000 in a self managed super fund. The interest payment has to be paid upfront each year, whoever you can pay monthly or at each pay as often as you like.
I think that there are great advantages in prop[erty warrants and they give investors a choice as to where they invest their money in super.
