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May 24, 2022
Top tips to help property investors prepare for tax time
Gather up your paperwork everyone, it’s every accountant’s favourite time of year – tax time! It can be a headache for those of us not quite as well-versed in all things tax but it’s vital to have all your details correct as mistakes can be very costly for property investors. Ideally, find a tax agent who will go through everything with a fine-tooth comb to ensure you achieve the best outcomes. With 15 years of industry experience, we have gone through the process many times and have come up with a list of the key aspects to be aware of as you prepare for your tax return. Be aware of deductions you can and can’t claim This is the best bit – discovering all the deductions you are entitled to as an investor that will lower your taxable income. At this point, you need to gather all receipts of expenses you’ve had throughout the year. You can find out the nitty gritty at the Australian Taxation Office (ATO) website, but item that aren’t always obvious for claiming include advertising, interest from mortgage, mortgage fees, council rates, maintenance costs, accountant’s fees, insurances, and property management fees. Depreciation Unlike the above-mentioned deductions, depreciation is a different beast as it’s not based on any expenditure, but depreciation can greatly impact your tax return depending on when your property was built. You can’t claim on properties built before 16 September 1987 but beyond that date, you can claim depreciation costs of 2.5% per year for 40 years. It can be a complicated claim, so we recommend looking into a quantity surveyor who will provide you with a formal tax depreciation schedule and well worth looking into. Income goes beyond rent This is the not-so-best bit where you might be up for paying tax. Of course, any rent you received must be added to your income tally, but don’t forget other investment dollars such as rental bond returns, insurance payouts (including for lost rent), booking fees or any property sales. Don’t rule out last year’s claims You have two years to adjust your claims with the ATO for small to medium businesses, which included property investments. So, if you’ve forgotten to include depreciation in the years you’ve owned a property, you can at least amend the past two years. There’s a lot that goes into a good tax preparation, so start collecting your paperwork early so by 31 October you have done all the work required! If you need recommendations of good tax agents or quantity surveyors for your property, call our director Diana Patrascu on 0402 888 550.
Jan 27, 2022
That sweet spot – how to choose the location for your next investment
When choosing our own home, it’s easy to be swayed by emotional decisions such as living close to friends, family and our workplaces, let alone falling in love with the lifestyle created by the home. None of these apply when purchasing your investment, which opens up a lot more scope to choose wisely (head over heart, people!). However, when there is more choice, often there can be some overwhelm. So, I want this blog to guide you through the process so you find a property investment that will maximise your return. Firstly, review the vacancy rates. It’s a good time to be a property owner in Perth (although I’ve said that for a while, the market doesn’t seem to be slowing down!), but it’s important to check where vacancy rates are low which means your property will not be empty for long between tenants. Also, a location with high vacancy rates will be harder to sell in the future. Consider your future tenants who will, like you, be imagining how their lifestyle will look in your property. Make sure there is access to schools (and ideally, good schools with high ranking), shopping centres, hospitals and gyms – the modern conveniences that many of us like to be within a walk or short drive of. Be aware of any future infrastructure or planned development projects which will eventually increase rental value and property value if you were to sell. Things to avoid, like I said, is to keep your heart in check and don’t let your own emotions get involved! Don’t buy a location that suits you or a property that is simply aesthetically appealing to your eye. In fact, take someone trusted with you to home opens who will keep you accountable to your investment goals before you commit, or point out things you might not have considered. Also, focus on the surrounds of the property – keep your eyes out for neighbours (good or bad, they have the potential to make a big difference to your tenant’s happiness!) and the general aesthetics of the street. Also, avoid suburbs with large existing rental pools as you’ll be competing with a lot of other landlords for the same group of renters, which can drop rental value. Beyond your own research, should you be using a local property manager once you have chosen your desired investment location? Well, yes and no! It’s much easier for local property managers to attend home opens on your behalf and of course, they have knowledge of the area which is valuable. However, new technology and programs used by good property managers means we can easily service areas outside of our immediate suburbs. Potential tenants rarely go to a property manager or real estate agent’s office to research their next abode, we know they’re more likely to visit websites such as realestate.com.au, reiwa.com.au and domain.com.au to scour their options. And once you have your investment and a good tenant, advanced property management software allows us to manage properties via an online portal anytime, from anywhere. So, instead of a local property manager – focus on finding the right property manager! One with great references (ideally from someone you know), one you have a great rapport with because you’ll be dealing with them frequently and one who is equally driven to help you achieve your property portfolio dreams. There are some excellent property managers out there, and if I sound like the right match for you, contact me on 0402 888 550 to discuss your options. I believe location stands as one of the most crucial considerations before buying a property and I can’t wait to help you find the perfect place for your investment.
May 3, 2021
How investors can make the most of tax time
Pour yourself a strong coffee and prop up your eyelids with toothpicks, it’s time to talk tax. To entice you a little more, this blog is going to teach you how to make, or at least save, a substantial amount of money. As a property investor, it’s really important to be aware of how tax depreciation works and how you can maximise your return… So here’s the what, why, how and who of making some money back on your investment. What is tax depreciation? Tax depreciation is a tax deduction claimed for the natural wear and tear of an income-producing building and its assets over time. It is generally the second biggest tax deduction for property investors, after interest. Every residential property investor should have a tax depreciation schedule to substantiate and claim maximum deductions. You can claim this loss in value as a tax deduction in your annual tax return. A depreciation schedule lasts for the life of the property, which is 40 years. You need to pay one initial tax-deductible fee for the schedule, and then it is yours to provide to your accountant throughout the life of your property. If you make significant changes to your property, you may need to update your schedule. Who can claim tax depreciation? Tax depreciation deductions are available for both residential investment property and commercial buildings. Most properties (new and old) have depreciation available. How do you claim tax depreciation? Good news alert! You don’t need to spend money to claim tax depreciation. Tax depreciation deductions are split into two categories: Capital works deductions This refers to the buildings structure and items that are permanently fixed to the property such as kitchen cupboards, doors & sinks. Typically makes up 85 to 90% of the total claim, or Plant and equipment depreciation This refers to items which are easily removable from the property such as carpet, hot water systems and blinds. These assets have a limited effective life as set out by the Australian Tax Office and can generally be depreciated over time. There are different rates of depreciation available for different properties based on their type, industry and construction commencement date. For more help determining the rate for your property, contact one of my recommended tax experts listed below. Can you claim in retrospect? More good news, you can claim previous renovations. Anything in the property that is part of a previous renovation will be estimated and depreciated accordingly, even if the work was completed by a previous owner. This includes items that are not obvious, such as new plumbing, water proofing or electrical wiring. Do certain property types attract a bigger claim? While almost all residential property investors can claim depreciation, given the 2017 legislation, those who build or buy brand new rental properties will usually claim higher deductions. However, any residential property that has either been built or renovated since 1987 will have a structural claim that will give ongoing deductions for forty years. I’m ready to make money… where do I start? We can recommend some experts in this field who can assist with arranging a depreciation schedule for your property. BMT Tax Depreciation – 1300 728 726 or head over to their website at www.bmtqs.com.au DEPPRO Depreciation Professionals – 9381 6100 or https://deppro.com.au/location/perth/ Asset Reports – 1800 47 37 67 87 or https://www.assetreports.com.au/residential-td Any final words of wisdom? The most important step is to get yourself a depreciation schedule, it’s an essential aspect of any investment property strategy. We recommend you get your schedule soon after settlement to ensure that you’re claiming the maximum deductions straight away. However, if you’ve owned your investment property for many years, it’s not too late! A depreciation schedule can be used to amend up to two previous tax returns to recoup missing deductions. Now is the time to order your schedule – if you pay before June 30, you can claim the fee as a deduction in your tax return this financial year. If this all seems sounds like a foreign language still, I’m more than happy to discuss the topic in further detail. Contact me for a chat on 0402 888 550.
Apr 21, 2021
How to make the most of Perth’s property market boom
With so many other countries battling high COVID-19 cases, I’ve never felt luckier to live in our isolated city. Perth beaches, warm weather and smaller population have always made me happy to call it my hometown but now we have added reason to feel appreciative. It seems I’m not the only one feeling this way with people flooding home from living abroad (and even interstate), which means our real estate market is booming. For those selling their investment properties, it has been an amazing time. Personally, I sold an investment property at first home open at asking price when 12 months ago, we had no bites at all. How the market has changed! However, the flipside to this has been our rental market has reached crisis levels. The sale of many investments means tenants have been moved out of their rentals or have been asked to pay higher rent to match the very competitive market rates. Ouch! Can you believe the vacancy rate has dropped to below one percent?! If you’re renting, you may feel anxious about what is happening and if you’re an investor, perhaps you’re wondering how to make the most of a booming market while keeping a good relationship with a great tenant. So here are my tips for you to consider as you navigate this tricky time… Maintain a good relationship with your property manager Renters: Now more than ever, you need an industry expert on your team as they will vouch for you when it comes to providing references, they’ll be ahead of the pack of what’s coming onto the market and able to offer advice on appropriate rental prices. Investors: Maintain open communication with your property manager and tenant because at the end of the day, your tenant pays the mortgage and you need to negotiate terms that benefit both parties. Just because the market is hot doesn’t guarantee you a great tenant – so if you have a good one, look after them! Always remember, you might own the property but it is their home. Readjust your financial goals Renters: While prices are high, it might be a good time for renters to consider purchasing your first home to skip the rental market madness and create some security for where you live. Interest rates remain at record lows, so despite property prices being slightly higher there’s some relief on the other side! Buckle down and safe for that deposit… Investors: Maybe it’s time to reconsider your portfolios. The COVID crisis will pass and I think it’s key to receive some good advice on where to from here. Again, a property manager with years of experience will set you up for success long term. It’s a very exciting time to be in the Perth property market and seeing the confidence buyers are displaying, particularly first home buyers and first-time investors. It’s a great position to be in for a property manager to present our clients with an array of applications to choose from, particularly with multiple offers above asking price. If you need assistance with your property or renting the right place, I’d love to help you. Contact me on 0402 888 550 to discuss further.
Jan 6, 2021
Maximise your investment over the next 12 months
The holiday season is a pretty special time – not only do we get to have all the annual parties, festive celebrations and a few public holidays giving us a well-earned break, it’s also a time to look forward to a shiny, bright new year. We are so pleased to see you, 2021! Have you started thinking about how you want this year to look for your investment? It’s a great time to have a property for lease, with rentals in high demand in Perth. Before you jump in and take the first offer with a decent reference, we have done the leg work for the ultimate guide to maximise your investment in 2021. Happy New Year! Presentation Add value with a simple renovation or by adding a few key, new furniture pieces and watch the rental price tag climb. If money is tight, a fresh paint job (go for neutrals for broad appeal and a brighter appearance) or an afternoon in the garden can boost the overall presentation significantly (yep, mow the lawn please!). Adopt a minimalist mindset for your property, which means clearing all paths, hallways and balconies, and decluttering so potential tenants can visualise how they will live in the space. The best time to find a new tenant There will always be people on the lookout for somewhere to live, but there are certain times of year when interest will be higher. Right now, from January to February, is prime time for people to move due to people moving their kids into different schools or universities, new jobs or renters after a lifestyle change as the new year rolls in. The second busiest time is winter (June to August) with six-month tenancies expiring and second semester of university kicking off. Also, when signing up a new tenant, align the rental agreement to finish during these two peak times. Set your lease to match the market environment This is where a property manager can make a big difference to your life with a broad understanding of the market and experience with trends to advise you on what your new lease should look like and the ideal rental amounts. Otherwise, head down and you-know-what up for some serious research into the current market for the city and locality your property is in before setting new fees and lease terms. Simple and effective home improvements Aside from looking pretty, keep on top of minor home repairs consistently (another area property managers improve your quality of life – handball that one our way!) and consider small home improvements in line with your ideal tenant. If you have an apartment, install a washing machine and dryer. If you’re near a university, consider creating a study whether it’s a room or nook. If you’re currently sweltering away in Perth like us, air-conditioning units will be receive a big tick of approval from all potential tenants. Hirea good property manager Include all the above in things you don’t have to worry about when you have a great property manager looking after your investment. From marketing your property to securing the highest rental income, D Residential Group has a well-referenced list of potential tenants and if none are the perfect match, we create inspired online listings designed to attract further good applicants. And that’s just the start… Contact me on 0402 888 550 to discuss how we can help accelerate your investment and make the process enjoyable this year.
Sep 15, 2020
5 Tips before you begin
Thinking of investing in property? Our top five tips before you begin… Property investment can be one of the most financially rewarding decisions you could make… if you do it well. It’s important to understand risks around any investment and to set up strategies to give yourself the best outcomes. With 16 years industry experience, I’ve come across five key areas I advise all clients to review before taking the plunge and you should consider, too. Review your finances and set a budget Before you even start browsing properties, get your budget in order. Make sure you are crystal clear on your income and expenditure, so you know exactly how much you are willing to part with each month on your investment (hint: spend less than you earn, win at life). Do you have a deposit saved? Do you have a small slush pile you can use for any unforeseen costs? All of these will make your journey into investing much smoother. Find a good financial advisor This type of investment should be considered a longer game when you consider upfront fees such as stamp duty, conveyancing and legal fees, and building/pest inspections. Securing the right loan structure for your needs could see the difference in thousands of dollars long-term and maximising the ongoing tax benefits will see immediate reward – so my advice is to touch base with a great financial advisor who ensures your investment works for you. I have some fantastic contacts I work with and happy to recommend them if you’re interested. Research the area and its growth While property investment can provide you with an income from the rent and tax cuts in the short term, the capital growth of the property has the potential to generate serious wealth long term. Understanding whether the suburb is in a growth phase, the value of a property and rental demand are key to choosing a good investment. When investing, it’s key to use your head over your heart and choose a property which will instantly provide you with rental income rather than waiting for someone to ‘fall in love’ with the place like you did (save that for your own home!). If investing with a partner or group, write everything down Sometimes just getting into the market is tough (Gen Z, I hear you) and the best way to crack in is with a friend or family member. The upside is doubling your borrowing capacity, but it also makes your investment slightly more complicated (no matter how much you love them, trust me!). So, define your roles and expectations so you’re all on the same page with how much you’re willing to contribute to a long-term mortgage and ongoing costs. Write it down, write it down, write it down. He said/she said serves no one in many areas of life, but it’s particularly useless in property investment. You’re welcome. Engage a Property Manager While there’s an abundance of information at your fingertips (thanks google), it can also be overwhelming and occasionally you’ll come up against conflicting advice on the property market. Having an expert who knows exactly what the market is doing, from knowing what’s a bargain and what’s a dud to insight on rental demand, will give you a massive step up, let alone peace of mind. I’m always happy to help with advice on where the highest rental demand is and the current best locations, so call me anytime to talk your ideas through on 0402 888 550.