i've just purchased my investment property, a unit, and is renting it out asap.
i have interested tenants and is planning to manage the unit privately without
going through the REA.
my question is, is there anything i need to do before renting it out, e.g. get a valuation
done so that i can claim depreciation next year. the property will be negatively geared
hence if there's any other tips on how i should do this, it would be great!
do i really need to get a condition report done before letting out the unit or is a document
detailing the current condition as agreed by myself and the tenant enough?
thanks for any tips/advices guysinsanoParticipant@insanoJoin Date: 2009Post Count: 34
I wouldn't self manage any of my properties, just easier to have a REA manage it because should things go wrong they'd handle all the eviction notices, court dealing ect, just another form of insurance in my opinion. But each to their own.
As for depreciation, I get a depreciation report done, there's plenty of companies out there around $500 upwards and most guarantee they'll get you back their fee or double or there's no charge or something like that. I think I remember my accountant saying best to get it done closer to the start of the financial year but I could be wrong. Also get it done when your property is producing income or advertised as available for rent else it won't be a tax deduction.insanoParticipant@insanoJoin Date: 2009Post Count: 34
thanks insanowayno for your advice. the depreciation schedule is still a bit confusing. i'll ask an accountant about that.
If you do intend self-managing make sure you know the tenancy laws of the state the property is located in. Many state government consumer affairs type sites have the information you'll need.
You will need to provide each tenant with an incoming property condition report. The tenant will compare this report with the property and make amendments as required. Any Bond dispute will be based upon what is written in the PCR so accuracy and attention to detail is required. I would also recommend a photographic record be completed.
Some state government sites have these forms available online.
Managing your own property while things go well is fine – make sure you are prepared in case things don't work out so well.
As wayno has said a Quantity Surveyor can do a depreciation report for you. There are a number of companies around who will do the job for you. As you are renting the property from settlement date you can organise your QS report pretty well straight away. They take about 6 – 8 weeks to prepare and you can use the information to assist tax return preparation and also for your PAYG Tax Variation, if you are using this strategy as part of your overall approach.
If i get the depreciation report done now, will i have to get it done again next year just before i do next year's tax return? I guess it will have to be a yearly thing?
No – good residential property depreciation reports expire when the property is 40 yrs old. There are a few variations to this but in todays world that is a pretty accurate.CatalystParticipant@catalystJoin Date: 2008Post Count: 1,404
Given your questions I would in NO WAY manage myself.
First learn the rules and what you legally need to do. You could find yourself with heavy fines for not following simple rules (like the lease, bond, notice of rent increase, eviction etc). Or worse still you could lose everything.
The current condition IS the condition report. Yes you both sign to agree to the condition of the unit.
What don't you understand about the depreciation report. You get one, you get money back for nothing. I ask my ex accountant years ago whether I should get a depreciation report done. He said "up to you". I got a new accountant.
Email http://www.depreciator.com.au with a description of your place- year built, type of dwelling, what it's made of, whether there have been any renovations and he will tell you whether it's worthwhile doing. They won't do it unless you get your money back the first year.
Thanks everyone for your comments.
After trying to rent it out privately, and getting a few weird and dodgy applicants, i've decided to let a REA manage it.
It was a lot more worrying after meeting the prospective tennants!
'Dodgy' tenants do seek out private landlords as the landlord doesn't have access to tenant's database.
By way of contrast the REA can check TICA before even considering a potential tenant.
This reason is the major benefit of REA.
Better to find out now than in the future when life gets a little tough.
Songrad Are you employed or Self employed ?
If the property is negatively geared and you are PAYG i would be looking to get the Depreciation schedule done ASAP and then lodging a Tax variation.
Don't wait until the end of the year to get any potential refund as it will be a lot more powerful in your pay packet each fortnight.
Yours in Finance
Yea one of the tennants didn't have any documents, just an age card (no licence) which i found odd as he was
in his mid 20s.
Qlds007, i am employed and is PAYG. I have just settled this property 2 weeks ago, and have already lodged my tax return for last year. Should i still do a tax variation?
Yes certainly for the year going forward.
Why wait until post June 30 2013 to claim your deductions.
Yours in FinanceAndrew_AParticipant@andrew_aJoin Date: 2003Post Count: 392
Apart from the depreciation schedule which is one of your best friends as an investor; ditching the self managing is a wise move until you have more experience or probably ever, you tend to attract the tenants who wouldn't bother applying through an office due to their record.
Certainly worth doing your PAYG Tax Variation now. If you have ordered your depreciation report and it is not far away then consider waiting until the information arrives. If the depreciation report is still some distance away then you can submit a PAYG variation request now and then update it when the report arrives.
Either way you do not need to be a mathematician to work your variation out.
Word of caution be a little conservative with costs and slightly bullish about income. This means the ATO will still be paying you a refund at years end rather than you sending them a cheque. The ATO is much happier with this.
Have you ordered your report yet?
Thanks Derek for the info, I have contacted a company for a quote regarding the depreciation report and also booked an appointment to see an accountant about the whole thing. Should I do the variation through the accountant you think? Or it can be something I can do myself?
If you have booked in to see an Accountant he is probably only going to charge a hour or so for doing the Tax variation so i would get him to do it for you.
At least start yourself on the right track but remember you need to do a variation each Tax year.
Yours in Finance
coolz thanks Qlds007
Some accountants are reluctant to do the variation – so see how you go with him/her.
The form is relatively easy to fill in if your income situation is relatively stable and predictable.
Also guys, regarding claiming of deductions. On settlement (Sept 2012), i pre-paid the council rates and also part of the strata levy. Can i still claim these (for the 2012-2013 yr) considering i wont have the receipts for them or would it still count because i've just simply prepaid it on settlement? ta