All Topics / Legal & Accounting / Recording IP Expenses

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  • Profile photo of lbglenlbglen
    Participant
    @lbglen
    Join Date: 2004
    Post Count: 37

    Hi All,

    I have recently bought an IP (first one – YAY!) and was just wondering how folks go about recording expenses that ultimately will be claimed come tax time (ie. agent fees, body corp, repairs, etc..)?

    I’d like to keep it simple, and was thinking a spreadsheet would do. If anyone does this, do you have an example you could provide?

    I’ve also checked the ATO website and they have a tool that seems to offer a way of recording these types of details, along with income related expenses – has anyone used this, and if so, is it good/worthwhile?

    Come tax time – do you just provide the list of details to your accountant and they do the rest?

    Any advice/help would be much appreciated.

    Cheers,
    LG

    Profile photo of Rookie DeveloperRookie Developer
    Member
    @rookie-developer
    Join Date: 2005
    Post Count: 188

    Hi
    I would like to add…
    how do you do that for a buy, reno & sell?
    also how do you do that for multiple buy reno sells?

    TroynBec

    The ducks are flying closer to home!!!!

    [email protected]

    Profile photo of catacata
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    @cata
    Join Date: 2005
    Post Count: 559

    I use MYOB but I also use it for business.
    I believe that Quicken is a cheap and easy to run program

    CATA
    Asset Protection Specialist
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    Profile photo of AmandaBSAmandaBS
    Participant
    @amandabs
    Join Date: 2005
    Post Count: 549

    First set yourself up a permanant lever arch file which you’ll keep details of the purchase, bank loans, legal papers, and any capital improvements made on the property. A set of photo’s is also good to record what the property looks like in case of insurance problems or to show “before” and “after” work.
    To keep it easy open a bank cheque account exclusively for this property. If you buy anything yourself with cash or on mastercard write yourself out a cheque (keep receipt) and reimburse yourself. That way you’ll have all the expenses in one spot. Second record income/expenses in an annual tax file for your Accountant. If you only have one ip I’d just stick with a spreadsheet like Excel or Lotus. Have a “Total” column and then to the right dissect expenses into categories (Insurance, repairs, body corp, cleaning etc.) Add them all up and make sure they cross add. With any repairs make sure you provide as much detail as possible so your Accountant can determine if its claimable as a repair or a capital improvement to the property.
    So you don’t loose the receipts buy an expandable folder and file receipts in month order Jul 2005 to 30 jun 2006.
    If you can’t get access to spreadsheet software just buy a journal book rule up the lines yourself and then stick any receipts in the back of the book.
    Easy !!

    Amanda
    “It is better to be inconspicuously wealthy, than to be ostentatiously poor…”

    Profile photo of DerekDerek
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    @derek
    Join Date: 2004
    Post Count: 3,544

    Hi LG,

    Congrats on the IP.

    I use a simple excel spreadsheet that you are welcome to have. All you need do is send me an email with the subject property spreadsheet and I’ll return you a copy no strings attached.

    I’ll be the first to admit it isn’t fancy – very cheap and it does the job.

    As Amanda said you also need to consider the paper reocrds of the other bits of paper associated with IPs – I use a leverarch file for each property with sections devoted to aspects relevant to each property; rental (agreements, documents and property reports), strata (meeting minutes, agendas etc), finance (loan applications, correspondence, valuations etc), settlement (contracts, correspondence etc) and a misc generally covers it for my needs.

    For me it is keep the system simple as I have more important things to do. In saying that you are now entering a business and need to adopt efficient and effective processes to run your business.

    Derek
    [email protected]
    http://www.pis.theinvestorsclub.com.au
    0409 882 958

    Profile photo of Just LearningJust Learning
    Member
    @just-learning
    Join Date: 2004
    Post Count: 57

    Hi lbglen,

    Coincidentally, just finished making up a simple xcel spreadsheet for myself for exactly the same purpose that you are after, maybe similar to Terry’s. Also, I agree with Terry and AmandaBS about paper records, I do the same.

    If you want a copy of my spreadsheet, I can email it to you. Not sure how all that works, doesn’t look like you can add attachments to public posts or to emails sent from this site – looks all a bit to difficult to work out

    regards,

    Paul

    Terry – I’ll show you mine, if you show me yours ! – just got to work out how this emailing attachments through the site works

    Profile photo of DerekDerek
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    @derek
    Join Date: 2004
    Post Count: 3,544

    Hi Paul,

    You are right – you cannot attach documents to either PMs or emails through this site.

    The best option is to either post your email in a PM or within the thread itself so that information can be exchanged via the backdoor. Obviously some people do not like posting email addresses on public forums so the PM may be the best option.

    Derek
    [email protected]
    http://www.pis.theinvestorsclub.com.au
    0409 882 958

    Profile photo of AmandaBSAmandaBS
    Participant
    @amandabs
    Join Date: 2005
    Post Count: 549

    Further to my earlier post I forgot to mention that your PM will give you monthly rent statement which you need to keep. At the end of the financial year your PM should provide you with a summary of rent and any deductions.(Give to your Accountant)
    Also you may be eligible to claim some motor vehicle expenses if you used your car to visit the property or carry out work for whatever reason. You dont need a log book or to have kept your car expenses providing your claim is under 5000klm. You just need a reasonable estimate. Every little bit helps. For further details here’s the ATO link
    http://www.ato.gov.au/individuals/content.asp?doc=/content/33874.htm

    Amanda
    “It is better to be inconspicuously wealthy, than to be ostentatiously poor…”

    Profile photo of redwingredwing
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    @redwing
    Join Date: 2003
    Post Count: 2,733

    As Amanda says , that summary is a great start for an Excel spreadsheet, we also keep seperate files for each IP

    “Money is a currency, like electricity and it requires momentum to make it Effective”
    Count The Currency With This Online Positive Cashflow Calculator

    Profile photo of MITMIT
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    @millionaire-in-training
    Join Date: 2004
    Post Count: 154

    Hi Lbglen

    For the only IP I have had so far and it wasn’t through a trust unfortunately, I had a spreasheet that took care of all my tax with columns for the IP.
    I had a separate account for rent reciepts and expenditure and kepp all other doco in manila folders in the filing cab.
    As long as you keep it all together, tax time will be a whole lot easier.

    My plan with the next round it to do something similar and keep files on each one.

    As Derek says keep it simple, but keep all the records.

    Regards
    Sue

    MIT | Owen Real Estate
    Email Me

    Profile photo of Just LearningJust Learning
    Member
    @just-learning
    Join Date: 2004
    Post Count: 57

    Derek,

    Oophs, sorry to refer to you as Terry. Was reading one of his posts at the same time, anyway will email/PM my xcel spreadsheet. It’s really basic, as you alluded to., KISS. would be interested to see yours.

    regards,

    Paul

    Profile photo of Don NicolussiDon Nicolussi
    Participant
    @don
    Join Date: 2005
    Post Count: 1,086

    Hi,

    This is a very important and overlooked issue by many. Obviously when portfolios get larger ie over 10 properties then it may be a bit crazy around tax time.

    Talk to your accountant and find out how much extra the full accounting and book keeping service is. You may be surprised at how cheap it is. Just send them all the receipts and docs and it is done for you at the end of the year.

    The cost is of course deductible.

    If you are going to do it yourself the trick in not in the wizbangery of the program you use. The trick it regularly and consistently imputing the data.

    regards,

    Don


    D&L Property Projects Ltd
    Sourcing Quality Investments in New Zealand.Email to receive current deals & New Zealand Information Sheet.
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    Don Nicolussi | Mortgage Broker - Home Loan Warehouse
    http://homeloanwarehouse.com.au
    Email Me | Phone Me

    "I think of finance as a technology, a way of getting things done." Robert Shiller

    Profile photo of redwingredwing
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    @redwing
    Join Date: 2003
    Post Count: 2,733

    I also use http://www.excelaustralia.com.au software to track IP’s

    Prior to this it was just playing around with excel and input from other investors

    Check out Julia’s site bantacs as well for some great info..

    “Money is a currency, like electricity and it requires momentum to make it Effective”
    Count The Currency With This Online Positive Cashflow Calculator

    Profile photo of The Wild OneThe Wild One
    Member
    @the-wild-one
    Join Date: 2005
    Post Count: 54

    Hi, this is a good topic.

    I have my own idea when it comes to keeping records.
    Every year I purchase a new green Collins A 60 series Money Book. I then section it of with tabs for each property and one extra for stationary. Each section has the following headings.
    Date, Travel, Phone call, Rates, B.Corp, Manager, Interest, Misc, Rent.
    When my property statements, bank statements, or what ever arrive it takes only a few seconds to jot them down in the book. I then at my own leisure once every few months when I’ve nothing better to do enter it into a spread sheet. But my accountant says that I don’t need to as my money book is more than adequate. I Also have an expanding file for each property and stationary for receipts.

    Profile photo of adambcadambc
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    @adambc
    Join Date: 2003
    Post Count: 145

    Great post guys! This is what this forum is all about!

    Oh and Don – I liked “wizbangery”! Nice one!

    Adam

    Don’t let life get in the way of living.

    Profile photo of lbglenlbglen
    Participant
    @lbglen
    Join Date: 2004
    Post Count: 37

    Thanks for all the great input everyone. (PM’s sent to those who offered an example).

    adambc – couldn’t agree more! This forum continues to serve as an excellent resource for investors of all levels.

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