If you have an inkling you'll be investing in property in the future, or you're already an ardent investor, you'll need to understand how the 2014-15 federal budget affects you.
Pension age
The federal government's decision to raise the pension age to 70 by July 1 2035 will require individuals in their 20s and 30s to seriously consider strategies outside of superannuation and a government pension to fund an early retirement.
The move to raise the age pension to 67 by July 1 2023 had already been put into motion, so the most recent decision to add another three years to this figure reflects the reality of an ageing population.
Building an investment portfolio will be an important step in preparing for a secure retirement. According to research from Timetric released earlier this month, residential construction is tipped to become Australia's fastest-growing construction market until 2018, offering opportunities for those looking to secure investment property now.
Negative gearing
There was plenty of chatter about whether negative gearing would be abolished in the lead-up to the budget announcement. However, this approach to investment remained untouched.
Negative gearing is when the annual expenses associated with holding a property are greater than the income generated from it, allowing investors to reduce their taxable income.
However, there are other options available.
For instance, a cash-flow positive property is where gains from a rental property are greater than its costs, giving investors peace of mind when it comes to anticipating their ongoing expenses. Otherwise referred to as a positively geared or cash-flow positive real estate, this generates a passive stream of income that's accessible while you hold the property.
Infrastructure boost
The federal government's Infrastructure Growth Package will inject an additional $11.6 billion into major projects across the nation. This is on top of the existing $50 billion infrastructure commitment that's improving rail, road and intermodal projects, according to Minister for Infrastructure and Regional Development Warren Truss.
Individuals contemplating their investment options may wish to focus on buying property in areas that are set to benefit from the package. It's no secret that suburbs that have strong transport links, well-maintained facilities and excellent schools are a pick amongst tenants. Therefore, this growth package may encourage individuals to pursue property when it comes to building their future wealth.
