I am going overseas to work and am currently buying my unit. I will need to rent it out. I have contacted the real estate agent who do the strata and sold me the unit and they are happy to manage it.
Firstly, the carpet is crap. Really bad and I was thinking of replacing it before I went away. Now, I have been told not to as it will get recked, then I got told to do it as it can be tax deducted or something along those lines. So, should I or shouldn’t I do it? I was thinking of getting some fairly cheap carpet.
Also, is there any advice you can offer me. The thing is, I just don’t know what to ask because I don’t know what I am doing!
Thanks,This is my thoughts on it, and id appreciate anyone to correct me if i’m wrong.
replace the carpet, try and get some on the cheap (second hand places). basically fix up any problems, not to the extent that its in brilliant condition, but most definetly livable and rentable.
then get a depreciation schedule done. you will then be able to claim wear and tear on the fittings (schedule will cost around 400 dollars).
you will definetly have to talk to an accountant as you will be running a business here in australia, so you will have to pay tax.
not really sure how you would get around it, those that do it, will be able to help you out much better.Thanks,
I have made an appointment with a tax agent as I will need to manage my normal income tax anyway. Also, I got new curtains earlier this year, they cost $2500 and I was wondering if I should take them down and put up some cheap ones or if I should leave the ones up I have.It is a 3 bedroom free standing unit/villa – whatever you call them in a block of 8. It is near two universities, with a bus stop outside the front of the common garden, and an Australia post box at the other end. There is an aquatic centre 5 minutes walk away and a major shopping centre about 15 minutes walk away. The bus from the door goes to the shopping centre.
I REALLY need to have it renting the full time and I have paid the mortage 5 months in advance. Sine I will be storing all my stuff, which will cost me, I want to get as much $$$ as I can.
As an agent its simple crap dirty apartments attract crap tennants well presented gets a better dollar and a better tennant[
]Barbara, I would think that the dominant motivation is to get a tenant in there as soon as possible.
In may areas tenants are in short supply so making the dwelling look as attractive as possible isn’t a bad idea.
I am not an accountant but the advice of spending $ 400 on a depreciation schedule sounds ludicrous to me.
As you have a receipt I would say that this all you need.
Storing your curtains ? You mean spending money on new curtains and putting the old ones away for the moths to eat them ?
Pisces133
I disagree with $400 being a ludicrous amount to spend on a depreciation schedule. It will give you amounts that can be depreciated far in excess of just the carpet.
Barbara, you need a Quantity Surveyor to prepare the report for you on what you can claim – it should certainly help come tax time, and may not be as absolutely critical to have full rental (might provide some leeway). Leave the curtains up, you can depreciate them too – and as Peter says, you’ll be spending more money for no real gain.
Cheers
MelMel or Shaunwalker, any chance of either one of you showing us one such a depreciation schedule so that everyone can look what it details.
Thanks,
Pisces133
Barbara,
You’re ahead in having paid your mortgage in advance should you not get a tenant for a couple of weeks.
I believe with any property, a depreciation schedule is to your advantage as everything from the curtains to the doorknobs can be depreciated.
Have recently had 5 done at $330 each. (would have been $550 single) Look in the Australian Property Investor and you will see depreciation specialists who travel and you can ring on their free number. That’s apart from the Q/Surveyors’s in your area.An example – daughter has had a unit for about 6 years. She didn’t have a depreciation schedule in previous years and had used the same accountant who didn’t advise her to get one. She changed accountants, got the schedule done and gained tax-wise.
As for the curtains – they’re expensive and might not be looked after but they can be depreciated. Also you could put up eg. continuous lace or similiar which you would be able to depreciate instead, not nearly the cost, if you decide to store your good ones. I have found tenants sometimes want to put up their own curtains. We had the situation in the last week with one of our houses. They put up their own heavy drapes over the lace.
Seeing the carpet is really bad, I would suggest replacing it and over here in the east you can get a decent quality carpet for say $80pm laid – again tax deductible. A good tenant treats the place as their own and wont wreck the carpet. Sisal is supposed to be hardwearing, good for tenants. Save cost if you can, get family/friends to pull the old stuff up.
You need to get the unit in order before you get the depreciation person/quantity surveyor to do the schedule. They take lots of notes and photos in case there are any questions later.
A nicely presented unit should attract a good tenant.
Make sure you know what your agent will do for you when you are away, what percent commission will be charged, length of lease – 6 or 12 months, they should do 3-4 inspections per year,(the reports can be faxed to you overseas) so you know things are ok, they reviews rent if necessary, makes sure rent is in advance and not let get behind, your monthly rental statement should be posted to you each month, do internet banking so you know what is going on. Appoint someone who can maybe authorise a repair if that is necessary. You don’t want the agent willy-nilly eg. replacing a stove if a repair will fix it. You need to set a limit on what the agent can spend on repairs before having to contact you for the ok, or someone you have appointed here, and that goes into your management agreement.
Keep all your statements, receipts, everything to do with the property so you can substantiate it all at tax time as your income/expenses. Your depreciation schedule is tax deductible too.
Peter – those depreciation schedules are about 10 pages of really involved stuff, internal and external schedules.
Anna
Peter, I’m unsure as to why you are asking[?]
Have you never had one done? Or do you believe they’re too expensive, or not worth it[?]
I have a report done (cost was $325 I think) on a 30 year old property (so no building allowance, and some pretty old fixtures & fittings), and my claim in the first year was nearly $1000 – and in fact I need to find the second page that details some more.
I also have one for a new property in QLD (pp $178000). Depreciation claimed in first year is almost $6000. It came as part of the ‘Investors Club’ package, so I don’t know what they (we) paid for it.
The tax office will only accept a Quantity Surveyor to do these reports. I think they were well worth up to $500.
Cheers
MelA really quick list of what they value (not extensive as I don’t want to fill the page!)
Carpet
Curtains
Blinds
Stove
Hot water installation
Distribution gear
Light fittings
Smoke detectors
Wall heater
Exhaust fans
Pasive (removable) security systems
Furniture, conunter fittings, shelving
Modular vanity units
Shower screens
Modular kitchen cupboardsSome of these relate to building writeoff, like kitchens, and I think shower screens now.
Wow. This is brillaint advice. Thankyou so much all of you.
I have been through a report with the real estate in regards to charges ect and am happy to say all the stuff mentioned in the report is what you all mentioned. I am happy with the real estate. They sold me this place, and do the strata on it and as an owner occupier, I have seen them in action with problems in rented units in our blocks and they are excellent at sorting out bad tennants ect. I have been on the strata council myself since 1998 and have worked close with them.
I am not leaving until April but will be putting it on the market in Febuaray so I can be here to iron out any problems. I have had a new hotplate installed for this rental as the old one was broken, I don’t use them myself so I was happy to be hotplateless. I also had two locks fixed as they were a bit dodgy and I seemed to be the onlyperson who could get them open. Also, I have had security screens put on all the windows recently (less than 2 weeks ago) and the bathroom was renovated fully last year. I have painted the walls this year too.
I think I shall have to get one of these depreciation schedules done. I am in Western Australia, Perth Metro area, can anyone recommend someone? My email is [email protected] if someone would like to email me.
Also, can I claim the hotplate and it’s installation, the new security screens and locks I had replaced as well. I have organised carpet quotes today and shall leave the curtains up.
The reason I fixed up some of the stuff now was because I new it was due to be done and I didn’t want to get it done when I was away, I have certain tradesmen I use that are reliable so wanted to use them.
Also, how do you work out the rental amount? I know the unit is worth about $185,000. It is in a good area, with house prices from $400,000 to 1 million quid. Ideally, i would like torent it for $240.00 a week. Is that realistic?
barbara, I would get a couple of real estate agents to give you quotes for the rental. That way you can geta good idea of prices in your area.
Also, look in the papers to see what is available and what it’s worth. You don’t want to charge too little, but you also don’t want to risk the empty house by charging too much.
Cheers
MelHi Barbara
Everyone has been really thorough with their advice just wanted to mention landlord protection insurance, incase you dont have it. Also you cant tax deduct things you have done prior to tenants being there in relation to the hot plate installation etc I would check with your accountant.
With depreciation schedules and units they also look at common property owned by all units like pools, lifts fire extinquishers etc in common to all units. Amzing sometimes what is on the complex.
ErikaJust jumping in if you don’t mind, Barbara, to say I’m glad you asked this question because Melbear provided the answers to a question I had about getting a depreciation schedule done on our old property (built in 1935 but has been renovated). I couldn’t make up my mind whether I should or shouldn’t and now I know I should [^]. So thanks Melbear and others.
I’m getting so much good advice from this forum, you’re all so knowledgeable!ANd yes Barbara I would get rid of the crappy carpet and leave the curtains where they are.
Barbara,
Try Deppro in Perth, i have property in perth and have used them. think they have offices in each state, they are on the web also.
with the carpets, definetly do, as someone pointed out crappy apartment- you know the rest, put it this way would you live there?
with the carpets if it’s a long term rental you can get a cheap good quality industrial or semi-industrial carpet, very hard wearing, reasonably comfortable, go for multi-coloured or ‘busy’ pattern, that way dirt etc won’t stand out too much over it’s life.
Good luck
REDWING
“The man that thinks at 5o as he did when he was 20 has wasted 30 years of his life”
Hi Barbara, I don’t know a lot about CGT and PPOR being turned into an investment property but some thoughts that came to mind when I read this string: how long are you going overseas for? Has your home had a strong capital growth that would then attract a proportion of capital gains tax if you turn it into an investment property. If you are only going overseas to work for a period of time – eg a year ???- then what has your accountant advised about keeping the property as your principal place of residence vs changing to an investment property? (Can anyone help me here? I am sure I have read that where work or something forces a temporary move, and you dont buy another home, that you can rent out your home and keep it as PPOR???? – must have something to do with what you claim against the income???) I don’t know the answers but just thought that these would be the questions I would raise if I was intending to come back – if not, then the questions are mute…
Cheers
LisaR[]Peter M
“I am not an accountant but the advice of spending $ 400 on a depreciation schedule sounds ludicrous to me”if you dont get one done you are ripping yourself off. i had one done on my Ip in darwin, cost me 440 dollars, return for this year 17,000 dollars in depreciation alone.
i dont have an electronic copy of it, but i can show melbear it, to verify i’m not lying.
Rolf De roos… always always get a depreciation schedule.. he says this in his book and he says it at his seminar.. the guy has millions, believe what he says.Peter M,
I have an example report if you still want to see one.
Email me and I will send it to you.
Cheers,
Simon Macks
Mortgage Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Hey Shaun, it’s Dolf!!
Castle Dreamer, you can leave your PPOR for up to 6 years, and claim it as in IP, and depreciate and all that stuff that you’d do for a normal IP.
The beauty is that if you move back in within 6 years, there is no CGT, even on the depreciation that you claimed!! Beautiful.
I just finished reading Dale GG’s Trust Magic, and he talks about the 6 year rule in this. He says it used to be only 3 years. Why did it change? Well, the politicians (who else?) realised that at the end of their careers, they could get a lucrative diplomatic post overseas. These were typically for 6 years.
Sooooo, if the rules stayed at 3 years, they would have to pay CGT on their house when they returned home, sold it and bought a better one with all their extra dollars!!!! So as a group, they changed it to 6 years.
Cheers
Mel
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