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National Rental Affordability Scheme (NRAS)

The National Rental Affordability Scheme (NRAS) is an Australian Government initiative financially supported by the Federal and state government to increase the supply of affordable rental housing to low-medium income household in areas with high housing needs and demand.NRAS financing



Features of the NRAS


ü      Annual tax credit of $9,524 per year per NRAS property

ü      You still can take advantage of the standard tax benefits associated with an investment property

ü      NRAS properties are located in the same area as non-NRAS properties

ü      You have to rent out the place for 20-25% below the market rent to eligible NRAS tenants who are not part of department of housing.

ü      Max Loan of 90% LVR, meaning a minimum deposit of 10% is required in most cases.

ü      The scheme runs for 10 years, but you are free to sell with no penalty at any time.



Financing NRAS


NRAS Interest Rates: Standard discounted variable and fixed rates - Rates from 4.74% Variable ( Feb 2014)

NRAS LVR: Max LVR 90% + LMI ( Strict conditions applies for loans over 80% LVR)


How it works?


Step1: Find Property


NRAS properties are limited to a max 30% concentration in any one development, this means NRAS properties are bundled up with another standard investment properties in the same development. Generally the prices of NRAS are similar to Non-NRAS properties in the same development














Step 2: Agreement set up with Consortium



A Consortium is the building company or management company that has been given the right to build or manage the property.

Each bank will have a list of approved Consortium that they desire, so which Consortium your property is held with will determine which bank you go with.


Consortium fee range from 5-15% of the NRAS tax offset amount.



Step 3: Suitable NRAS tenants, tenants who are on low- medium income.


                      household income limits – indexed as at 1 May 2012  NRAS
Household type
At commencement of NRAS tenancy initial income limit must not exceed*
During NRAS tenancy upper income limit must not exceed*
One adult
2 adults
3 adults
Sole parent with 1 child
Sole parent with 2 children
Sole parent with 3 children
Couple with 1 child
Couple with 2 children
Couple with 3 children





Step 4: Tax Return


Tax credit of $9,981 per year will be applied to your tax return (under ATO section NAT 2679)
1. Commonwealth Government incentive of $7,486 per dwelling per year as a refundable tax offset in July
2. State Government incentive of $2,495 per dwelling per year as a refundable tax offset in September

Step 5: Claim standard investment expenses

Claim standard depreciation and investment expenses on top of your NRAS incentives.



Quick Summary


Tax offset of $9,881 per year
Require a bit more deposit then standard properties, Max LVR of 80-90%              
No Limit to the tax offset and number of NRAS properties – I.e. 2 NRAS = $19,762 tax offset
Can only choose from the selected number of approved NRAS projects
Available for SMSF and Family trust 
Require a good income to service the banks loans, due to the rent being 20-25% under the market.
 NRAS properties are bundled up with Standard properties
Low rental vacancy, due to demand for affordable accommodation.
Income eligibility limits for tenants of NRAS are higher than those for social housing
After 10 years you can rent out the property at market rent and enjoy possible positive cash flow
Enjoy standard tax benefits associated with holding an investment property, such as depreciation.
Can sell and offload NRSA properties without any penalty.
Rent and Tax offset increase by CPI








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