Property Owners & Investors – Your Investment
Tax and your investment
Tax is an important consideration in maximising the return on your property investment. There are many things to consider and we recommend that you seek the advice of an independent tax agent or accountant for your specific needs.
What expenses can I claim in my tax?
You can claim expenses relating to your rental property but only for the period your property was rented or available for rent. Expenses may include advertising for tenants, leasing and management fees, bank charges, owners corporation fees, cleaning, council and water rates, gardening, insurance and depreciation. Interest charges on loans are tax deductible to the extent that the loan funds are used for incoming producing purposes.
Repairs to your investment property can also be be claimed, however improvements, being something new, something which generally furthers the income-producing ability or expected life of the property, something which generally changes the character of the item you have improved and/or something which goes beyond just restoring the efficient functioning of the property, are required to be depreciated over a period of time.
Do I need to have a tax depreciation schedule completed for my property?
Depending on the age of the property, it may be possible to claim for depreciation on fittings, fixtures and the cost of construction of your investment property. A report from a quantity surveyor will provide you with an assessment of the depreciation deductions available.
Do I need to advise the State Revenue Office that I am renting my property?
If you have previously occupied the property as your principal place of residence, you may need to advise the State Revenue Office of your intention to change this arrangement. We recommend that you seek independent advice from your taxation agent or accountant in relation to this query.
Property presentation tips
First impressions are critical when a prospective tenant inspects your property. Firstly, we will assist you in determining what type of tenant would be ideal for your property. In every area and age group, we also find there are tenants who want to save money and are happy to live in a property that is not in first class condition. There are others, such as professional people, who are happy to pay top rent, but expect the property to present at its’ absolute best.
There is no doubt that well presented properties achieve top rents and usually attract the best quality tenants. This adds up to a higher return on your investment, together with fewer and shorter vacancy periods.
Here are some valuable property presentation tips:
- Tend to the gardens, mow the lawns and clean the windows, paths, gutters and outside paintwork. These are all things seen from the street and you do not want prospective tenants to dismiss the property before getting to the front door.
- Repair or replace leaking taps, sticking doors, broken light fittings, loose door handles, rotten floor boards, leaky gutters and torn flyscreens.
- If you are thinking about painting, only paint those areas that really need it unless you plan on doing the lot. New paint may only make those areas left unpainted look more shabby. Use light, neutral colours as strong colours may not be to a tenants taste.
- Get rid of odours that you may not notice, but prospective tenants will, such as cigarette or pet smells. It may be worth having the carpets and curtains cleaned to create a fresh, clean smell throughout the home
- Open the curtains and blinds to let the sun and the views inside. The view will also make the rooms feel bigger.
- Have the property clean, tidy and uncluttered at inspection times.
Purchasing an investment property
Precise Property Management can assist you with the process of purchasing your next investment property. We can provide independent and impartial advice relating to the estimated rental return for a property, as well as recommendations on any improvements required to secure the best possible tenant.
Once you have chosen your next investment property we recommend you seek independent advice from your accountant, conveyancer and mortgage broker or preferred banking institution, to ensure a smooth, worry free transaction.
Your accountant will provide you with advice, based on your specific circumstances, regarding the correct structure in which to purchase the
property, for example, individual ownership, company, family trust or possibly a self managed superannuation fund. Engaging a experienced, licensed conveyancer will ensure that you are correctly advised on the details of the contract of sale and title particulars. Investment loans come in all different shapes and sizes, so it is important to seek the advice of a reputable lender to get the best loan rate and structure to suit your needs.
It is important to consider the benefits of landlord insurance for your investment property, in particular, in the event of loss of rent and accidential or malicious damage.
As with every investment, there are risks to be considered and landlord insurance, along with the professional management of Precise Property Management, can help minimise these risks.
Choose an insurance company which will provide you with the right cover for your needs and review their policy disclosure statement thoroughly.
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