Tag: valuation

Man Surfing on the Water

Is now the right time to buy property?

Posted on | by Allan Hall

The Australian property market is showing signs of change.

CoreLogic data reveals a -0.1% drop in national home values in December 2024 which is the first decline in nearly two years.

However, it’s important to recognise the diversity in Australia’s property markets. For example, Adelaide, Perth and Brisbane have shown strong growth whilst Melbourne, Hobart and the ACT are seeing declines. Sydney has held steady.

With up to three rate cuts predicted for 2025 and more properties expected to hit the market early in the year, now is the time to get your finances in order. Being prepared ensures you can act quickly when the right property becomes available.

Be Ready To Act

Allan Hall Finance specialises in helping buyers navigate the financial landscape. We offer free consultations to discuss your financial situation, come up with structures tailored to your needs and help you prepare for the opportunities ahead.

CONTACT ALLAN HALL FINANCE

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for sale sign

Changes for Australian and foreign residents buying and selling property

Posted on | by Allan Hall

Withholding changes when buying and selling property

What Australian residents need to know about the updates to the Foreign resident capital gains withholding (FRCGW).

The Foreign resident capital gains withholding (FRCGW) rules are changing from 1 January 2025.

Currently, Australian residents selling property must provide a clearance certificate to the purchaser at or before settlement to avoid having 12.5% withheld from a property sale where the value of the property is $750,000 or more.

Under the changes:

  • the withholding rate will increase from 12.5% to 15%
  • the $750,000 property value threshold will be removed, and the withholding rules will apply to all property sales.

The changes apply to contracts entered into on or after 1 January 2025.

FRCGW is designed to support the collection of tax liabilities owed by non-residents selling Australian property.

All Australian residents selling property will require a clearance certificate from the ATO, or withholding will apply to the transaction. If an Australian resident vendor doesn’t provide a clearance certificate by settlement, 15% of the sale price must be withheld by the purchaser and paid to the ATO.

If an amount is withheld from the sale price, the vendor will only receive any refund due after their next income tax return is processed at tax time.

Most clearance certificates will issue within a few days, but it is important to apply early because some can take up to 28 days to issue. They are valid for 12 months, so the vendor doesn’t need to wait until they have signed a contract.

Foreign resident vendors may be able to apply to vary the withholding rate. 

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assets

Valuing fund assets for SMSFs

Posted on | by Allan Hall

Each year you need to value your SMSF assets and provide supporting evidence to your auditor.

One of the many responsibilities SMSF trustees have every income year is valuing your fund’s assets at market value.

The market value of an asset is the amount that a willing buyer and seller would agree to in an arms-length transaction. These valuations will be used when preparing your fund’s accounts, statements and SMSF annual return (SAR).

Your asset valuations will be reviewed by your approved SMSF auditor as part of the annual audit prior to lodgement of your SAR. Your auditor will check that assets have been valued correctly, assess and document whether the basis for the valuations is appropriate given the nature of the asset. They are not responsible for valuing fund assets.

Make sure you get your valuations done before going to your auditor.

It’s your responsibility to provide objective and supportable evidence to your auditor for the valuation of the fund’s assets, including all relevant documents requested to prevent delays in auditing the fund. Failure to do so could result in a potential late lodgement of your annual return or a contravention if mistakes have been made.

Start researching now to find what type of evidence your need to support the valuation as this can take time. For some asset types the law requires valuations to be undertaken by a qualified independent valuer. Find out more by visiting SMSF valuation guidelines.

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artificial intelligence AI

The Economic Payoff of AI – A Long-Term Prospect

Posted on | by Allan Hall

Caution Advised Amid Enthusiasm for AI Investments

A new analysis highlights the long-term potential of artificial intelligence (AI) while urging investors to approach current market trends with caution.

Key Points

  • Although AI promises substantial benefits for productivity and economic growth, the payoff is expected over a more extended period than some anticipate
  • This comes at a time when AI-driven optimism is contributing to high US stock valuations, raising concerns about market sustainability
  • The analysis reveals that current investment levels in AI, though significant, are not enough to drive immediate economic transformation.

In 2023, US AI investment reached approximately US$67 billion. Even optimistic projections for 2025 put spending at around US$248 billion, far below the US$1 trillion needed to spur major economic acceleration.

Stock valuations, particularly in the growth sector, remain stretched.

Current US market prices are estimated to be 32% above fair value, with earnings growth needing an unprecedented 40% annual increase to align with these high valuations.

Such growth rates, double those seen in past technological booms, are unlikely, especially as US economic growth for 2025 is forecasted to slow to between 1% and 1.5%.

Despite these challenges, the long-term prospects for AI remain promising.

Economic benefits from AI are expected to take fuller shape between 2028 and 2040, as the technology matures and investments yield results. However, near-term gains are limited, underscoring the importance of a cautious and well-diversified investment strategy.

Implications for Personal Wealth

This analysis underscores the importance for our financial planning clients to manage expectations and maintain strategic investment approaches.

While AI has significant potential, its immediate economic contributions may not justify current market highs. Clients are advised to prioritise diversified portfolios, maintain realistic outlooks, and be prepared for possible market corrections.

A long-term, balanced approach that aligns with individual risk tolerance and investment goals remains crucial as AI continues to evolve.

For more information on diversified investment strategies, please contact your Allan Hall Financial Advisor.

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General Advice Warning

The information contained in this article is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs and, where appropriate, seek professional advice from a financial advisor. This site is designed for Australian residents only. Nothing on this website is an offer or a solicitation of an offer to acquire any products or services, by any person or entity outside of Australia. Robin Bell, Martin Cimino, Angelo Adam and Allan Hall Financial Planning Pty Ltd are Authorised Representatives of Consultum Financial Advisers Pty Ltd ABN 65 006 373 995 AFSL 230323. 

Source: 5 Sept 2024. Vanguard Australia FAS. Available from https://www.vanguard.com.au/adviser/learn/insights/markets-and-economy/economic-payoff-of-ai-is-coming