Hi, am planning to rent out our 2 bedroom unit, keep it as an investment property and rent it out..We will re rent a 3 bedroom villa and try and kick start my partners business in a better suburb. We will be having to pay the diff of around $70.00 per week so will be negative gearing. What are the implementations from this?
Also if i rent out our property through say LJ hooker or some one if the renter defaults on some payments etc, do they offer rental protection or would i need to take out sep insurance? if so how much is this normally? say if it was rented out at $330 per week?
Was wondering how much extra i would have to pay on top of the $70,00 p week i would be short plus, realestate fees and maybe the insurance….
any help would be very greatfull cheers.
You will need to have insurance – landlords insurance
see http://www.thebuzzinsurance.com.au/home-and-landlord-insurance/landlord.aspx
for an idea on price
You will have council rates $20 to $25 a week most likely cost
You will have water service charges each quarter
real estate property manager 2 – 3% I think of rent
Arranging lease there will be some upfront cost to do this
Advertising for tenants will be some up front cost also.As you are renting somewhere else if the unit was your main dwelling then there is a way of deeming it to remain your main dwelling for up to 6 years while renting it out . See an accountant for advice on this for CGT exemption for if you sell in the future.
So are you $70- just on the interest payments minus the rent?
OK add up all the ouitgoings for the year (Interest, rates, insurance, managements fees (6%- depends what state you are in) THEN take away the rent.
That's how much you are negative. This is how much you can claim on your tax.Think about getting a depreciation schedule, that will save you at least a couple of hundred dollars a year.
Definitely get Landlords insurance (about $300). That covers you for rent default and building, liability etc.
cheers guys,
1= So if a real estate does not cover me if the renter misses payments and if i am going to take out extra landlord insurance then i might as well let it myself?
1A = It looks like most land lord insures for all damage plus unpaid rent…but i already get flood damage and fire etc buy the strata insurance so would only really need the unpaid rent assistance and etc…Any where i can pick what i am covered for?
2=So how much of the say $ -70 plus all the other costs will i get back ,100% ? or is the amount taken off my salary? or will i only get like 10% back on what i have negative geared ?
3=If i am wanting to see someone about this matter plus starting a my partners hairdressing business, who am i best off seeing for both these issues, a tax man? or financial planner? Just need some one i guess who is good on tax with business and investment propertys.. Cheers
Hi,
1) – Landlord Insurance isn't much, $400-$500 a year, plus we get a discount on our insurance because it is managed by an agent. For a first timer, I'd put it through an agent, because the agent will also know the laws in relation to the tenancy.
2) Depends on your tax rate. The rental loss reduces your taxable income. Say you earn $50,000 a year. Your rental loss is $4,000. Your taxable income will be ($50,000 – $4,000) = $46,000. You will pay tax on the $46000, so you save ($4000 * 30%) = $1200 tax.
3) Don't bother with a financial planner. Go and see an accountant who has business clients, because they can help re: business structures, business plan, tax matters etc.
Ok thanks for that, how also would i get started, once i add up all the out of pocket negative gearing tax so that i can receive the deductions now instead of at the end of the year?
ninjatunes wrote:Ok thanks for that, how also would i get started, once i add up all the out of pocket negative gearing tax so that i can receive the deductions now instead of at the end of the year?You can apply for a PAYG withholding variation form, so that your employer deducts less tax from your salary.
Thanks for all the great info guys, can i also claim against the interest on my interest only mortgage?
You can claim you LOSSES. as mentioned above. Add everything up that you pay, take out the rent. You deduct what's left.
Unit LL insurance is only $300 (tax deductable). More if you don't use an agent.
You can let it yourself but do you know the rules and regulations? How to choose/get a good tenant? etc.
Speak to an accountant that has a property portfolio. They will know the best ways to claim. They will lodge the tax variation form or you can do it yourself. You need all the figures I mentioned above (and your wage).
A property manager is not going to be 2-3%. It is more likely to be 5 – 7% of your gross rent depending on where the property is located. The letting fee is usually 1 to 2 weeks rent, plus advertising costs.
Don't forget you may be able to claim part of the rent of the new house too.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
How does that work Terry? Got my attention
Well, since you are renting you don't need to worry about spoiling your CGT exempt status of the house. So you could have one room set aside for storage or office etc and may be able to claim a % of the rent/electricity/water etc. Maybe even toilet paper and, tea, coffee, milk and tim tams for 'clients'
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
You must be logged in to reply to this topic. If you don't have an account, you can register here.
