Q: What is NRAS?
A: The National Rental Affordability Scheme (NRAS) was introduced by the Federal Government in July 2008 to encourage the construction of new affordable housing across Australia. NRAS provides annual tax free rental incentives every year for the first 10 years.

Q: What NRAS aim to do?
A: By offering incentives NRAS aims at increasing the number of available rental properties across Australia to those in the moderate income households such as teachers, nurses and police.

Q: What is a NRAS approved property?
A: The guidelines set out by NRAS include:
A property that is approved to receive the NRAS incentives for up to 10 years

The property must be rented at a discount of at least 20% below the market rent

The property can only be tenanted by an eligible tenant/s

An annual Statement of Compliance must be submitted

Use of specialists housing and tenancy managers to ensure compliance with NRAS

Q. Why am I entitled to receive the incentives?
A. You will receive the incentives if purchase an NRAS approved property that you agree to rent at a reduced market rent rate of at least 20% to an eligible tenant for a period of 10 years.

Q. How much are the incentives?
A. Incentives are indexed annually at the housing rental component of the CPI (Consumer Price Index). The current year (2013/2014) incentives are $10,350.

Q. When will I receive my tax incentives?
A. The NRAS year runs from 1 May to 30 April. The Federal Government incentive is a Refundable Tax Offset (RTO). You will need to include this amount in your annual tax return with the RTO either reducing your tax liability or a cash refund.

The State Government incentive will be made in the form of a tax-free cash payment and is historically paid around September of each year.

Q. How are the incentives paid?
A. The Federal component is a Refundable Tax Offset (RTO). You will receive a tax certificate to submit with your annual tax return to the Australian Tax Office (ATO). The RTO reduces the amount of tax you pay until it reaches zero and any unused portion is then refundable in cash.

The State component is generally paid as cash (meaning non exempt/non assessable income) or as an additional RTO (which varies from States). The cash component will be paid by direct deposit into your nominated bank account. If the State provides it as a RTO you will need to include the RTO in your annual tax return to the ATO.

Q. How is the market rent rate determined?
A. The market rent is determined by an independent valuation which is conducted on behalf of and generally payable by the owner of the property. Under the scheme the market rent will be determined once a year by either of the following:

Independent valuation: At the start of years 1, 4 and 7

Consumer Price Index: At the start of years 2, 3, 5, 6, 8, 9 and 10 it will be determined by the rental growth in the location of the property

Q. Who can rent my NRAS approved property?
A. Tenants for the properties are required to meet the NRAS Income Eligibility Limits which are reviewed and updated annually in line with the NRAS year.

Q. Do I have a say over who the tenants are?
A. Yes, as the owner of the property you may. The property is managed essentially the same way as a normal rental property would be. The Tenancy Manager is able to supply the owner with the information on the eligible tenant and providing the tenant meets the eligibility criteria you may have the final say.

Q. Can one of my relatives live in my NRAS approved property?
A. Yes but if you nominate a tenant they will still be required to go through the same eligibility process with the Tenancy Manager.

Q. What other costs can I expect to pay for my NRAS approved property?
A.When you purchase the property you will incur the normal costs associated with owning an investment property such as insurance, rates and maintenance. Tenancy letting and ongoing property management fees for an NRAS property are higher than standard residential investment properties due to the level of compliance and tenancy eligibility checks which will vary from state to state.

Q. Can I sell my NRAS approved property?
A. Yes you can sell your property at any time. The purchaser will be able to participate in NRAS if they wish.