Landlords' Newsletter October 2014
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Transcript of Landlords' Newsletter October 2014
In this edition: How long will it take for your property to rent? Split Your Costs and Save a Small Fortune! Solar Power Rebates for Your Rental Property – Who Benefits? Could the Current Boom Become a Bubble? Save Thousands of Dollars Each Year in Claim-able Deprecation…
October 2014
A Selection of Properties Recently Leased Quote Another happy customer—Wow Moment Calendar of Events
Dear Landlord,
Talk about summer warmth
hitting with a sting - and it's
only the start of October! It's
beautiful seeing everything
blossom: the jacarandas
resplendent and gardens
teeming with flowers. We
welcome back Helen from her
recent holiday while the team
was busy securing tenancies
for the vacant properties and
confirming lease extensions
for those tenancies ending in
Rental team updates and lease extensions
December and November this
year.
With gardens in full glory and
the weather so warm, now is a
perfect time if you're thinking
of listing your property for sale.
Buyers tend to enjoy attending
weekend opens and making
an outing of their hunt! Already
we're heading into festive
season (following on from the
Brisbane festival with and its
spectacular River Fire finale)
and soon enough it'll be a
round of pre-Chrissie events.
Oh the arduous life of a real
estate agent… Seriously,
we've been working our butts
off and are thrilled to be
getting great results!
Our office is closed on the
Monday 6th October 2014 for
"Labor Day".
Best Regards,
Chris McCall, Business
Development Manager & the
Team (Christina, Julie, Helen
and Lisa)
www.propertyrentalsbrisbane.com FREE Information Guide For Landlords & Tenants
How long will it take for your property to rent?
That of course depends on the time of the year so here are the latest statistics for September.
BRISBANE STATISTICS The Market
Source: rentfind.com.au
Brisbane, QLD September 2014 Annual Change
Median Weekly Rent - House $410 2.5% increase
Median Weekly Rent - Unit/Apartment
$385 1.3% increase
Days on Market (Avg) 28.5 2.4 increase
Days Vacant (Avg) 16.8 1.4 increase
Split Your Costs and Save a
Small Fortune!
How split schedules can help
you save…
With property prices steadily ris-
ing, co-ownership of property is
becoming increasingly common.
Co-owning property with a friend,
family member or business
partner has the immediate benefit
of increasing an investor‘s
Many co-owners make the
m i s t a k e o f c a l c u l a t i n g
depreciation and then splitting
the deductions based on
o w n e r s h i p p e r c e n t a g e s .
However, depreciation legislation
allows co-owners to split an
asset‘s value by ownership
percentage first, potentially
qualifying them for higher rates of
depreciation. As a result,
co-owners are able to increase
their deductions substantially by
purchasing power while reducing
the burden of corresponding
expenses. Many investors are
unaware that co-ownership can
also substantially increase the
depreciation deductions both
owners can claim for an
investment property.
BMT Tax Depreciation can
provide a split depreciation
schedule for any investment
property that was co-purchased
by multiple parties. The most
common example of such an
arrangement would be spouses
purchasing an investment prop-
erty together. A split depreciation
schedule allows assets that are
co-owned to be depreciated
according to each owner‘s
interest in the assets.
www.propertyrentalsbrisbane.com FREE Information Guide For Landlords & Tenants
writing off plant and equipment items far sooner using methods such as
low-value pooling and immediate write-off. BMT Tax Depreciation
specialise in depreciation and are able to structure a schedule in this
way to maximise deductions.
Low-value pooling
Low-value pooling is a depreciation method whereby an investor with
an ownership interest in an asset of less than $1,000 in value can claim
deductions at an accelerated rate of 18.75% in the year of purchase
and 37.5% each year afterwards. As each investor‘s ownership interest
may qualify for the low-value pool, co-ownership expands the number
of items that can be claimed at this higher rate of depreciation.
This method of assigning ownership interest also applies when
assessing which items qualify for an immediate write-off. Ordinarily an
asset‘s value must be under $300 to be completely written off in the
first year. However, co-ownership also allows for an immediate write-off
to be claimed for any ownership interest which falls below this value,
increasing the range of eligible assets.
The benefits of this are clear. For a property with a 50:50 ownership
split, any plant and equipment items worth up to $600 can be
immediately written off as a 100% tax deduction.
The tables below demonstrate the impact a co-owned, non-split
depreciation schedule versus a split depreciation schedule can have on
an investor‘s deductions.
By obtaining a split depreciation
schedule, the first year claim for
each owner went from $162 to
$356 and the second year claim
went from $168 to $221.
A hot water system purchased for
$1,450 is able to be depreciated
using the low-value pool, greatly
increasing the value of
deductions. The split schedule is
also able to allow the heat light
and exhaust unit valued at $440
to be written off immediately as a
$220 deduction for each of the
owners.
These increases in deductions
are made especially significant
when considering that this exam-
ple only accounted for two
assets, a small portion of the
assets typically found in an
investment property.
A split depreciation schedule is
available to any investors who co
-own an investment property,
whether they are husband and
wife, friends or business partners
and for any ownership ratio. By
utilising low-value pooling and
immediate write-off on the many
fixtures and fittings within an
investment property, investors
are able to discover potentially
thousands of dollars of additional
www.propertyrentalsbrisbane.com FREE Information Guide For Landlords & Tenants
cash flow.
Article provided by BMT Tax
Depreciation.
Bradley Beer (B. Con. Mgt, AAIQS,
MRICS) is the Managing Director of
BMT Tax Depreciation.
Please contact 1300 728 726 or
visit www.bmtqs.com.au for an
Australia-wide service.
Solar Power Rebates for
Your Rental Property – Who
Benefits?
The Queensland Solar Bonus
Scheme is a government initia-
tive that pays eligible customers
for the surplus electricity gener-
ated from solar photovoltaic (PV)
systems which is exported to the
Queensland electricity grid. The
scheme is managed by the De-
partment of Energy and Water
Supply (DEWS).
While the Residential Tenancies
and Rooming Accommodation
Act 2008 (RTRA Act) does not
make specific reference to the
solar bonus scheme, it does
provide guidelines for service
charging.The RTRA Act allows a
lessor of a rental property to
charge a tenant for the quantity
of the service supplied to, or
used at, the property.
Although the RTRA Act does not
specifically state who is eligible
for the rebate, the Electricity Act
1994 does: the person who has
the electricity account in their
name is entitled to the bonus.
This means if the electricity
account is in the tenant‘s name
the tenant is able to claim the
bonus, or if the electricity account
is in the lessor‘s name, the lessor
is able to claim the bonus.
In some cases, the lessor may
set up the electricity account with
the supply authority in their own
name and then seek to recover
the charges to their account from
the tenant. If the rental property
is individually metered, the tenant
cannot be asked to pay more
than the amount charged to the
lessor by the supply authority for
the quantity of service used
(s165 (3bii), RTRA Act).
The ‗amount charged‘ is
ambiguous: the pre-rebate
amount is the maximum that can
be charged by the lessor. The
RTA strongly recommends the
lessor/agent/manager and the
tenant negotiate at the start of
the tenancy how the electricity
will be charged when a rental
property has solar power. Op-
tions include:
*The tenant has the electricity
account in their name. They pay
the account directly to the supply
authority and receive any rebate.
*The lessor has the electricity
account in their name. They pay
the account, receive the rebate,
and ask the tenant to reimburse
them the full amount.
*The lessor has the electricity
account in their name. They pay
the account and the tenant is
asked to reimburse the lessor the
full amount minus the rebate
amount (e.g. $400 account, mi-
nus $150 rebate = $250 amount
payable by the tenant).
*The lessor has the electricity
account in their name. They pay
the account and receive the
rebate. The cost of the electricity
service is absorbed in the rent.
Details about electricity charging
should be included in the tenancy
agreement, which is agreed and
signed by both parties at the start
of the tenancy. If you cannot
agree about the payment of a
service by talking with each
other, you may apply for dispute
resolution through the RTA.
Source: RTA – September 2014
www.propertyrentalsbrisbane.com FREE Information Guide For Landlords & Tenants
Perth, Canberra and Darwin are expected to be the worst performers in
this scenario, with Darwin‘s growth ranging from -3 per cent to one per
cent.
If rates were to fall in the first quarter of 2015, the weighted average
may creep up to around seven to 12 per cent.
However, if rates were to rise in mid- to late-2015, national growth may
be a more subdued three to six per cent.
In its September meeting minutes, the Reserve Bank signalled its
intention to keep rates at 2.5 per cent ―for the next year at least‖.
Mr Christopher said while prices were elevated, fears of a pricing
bubble were unfounded.
―The market is somewhat overvalued but not by as much as what some
have very publicly stated. I don‘t believe at this stage the market is in a
bubble,‖ he said.
―Some cities are heading into overvalued territory, but the point overall
is the market is far from a bubble situation when taking into account
historical valuations over the past 30 years.‖
The full results are reproduced below:
Could the Current Boom
Become a Bubble?
A new forecast by a leading real
estate expert has predicted the
housing market will continue its
strong momentum well into 2015.
According to the analysis by
Louis Christopher, from SQM
Research, prices still have room
to move over the coming 12
months.
In a scenario where rates remain
unchanged, the economy stays
steady and the Australian dollar
remains above 85 US cents, Mr
Christopher predicts the weighted
average growth of all cities will be
five to nine per cent.
In this scenario, Sydney would
continue to record outstanding
growth of eight to 12 per cent.
Melbourne and Brisbane would
be the next strongest performers
– Melbourne would record growth
of five to nine per cent while
Brisbane is tipped for five to eight
per cent growth.
Adelaide is also tipped for a pick-
up, with growth of four to seven
per cent, while Hobart could
experience growth of three to six
per cent. Source: Smart Property Investment – 18 September 2014
many investors did not know they
could claim such deductions by
obtaining a tax depreciation
schedule for the property.
―There is a lot of reliance on
accountants to do this work but
accountants are the ones who
use the schedules; they don‘t
prepare them,‖ Scott said.
A number of other companies
can prepare tax depreciation
schedules for investors. Scott
said CBRE had a large
residential valuation business
and could use its existing
infrastructure to offer a cost
competitive service in preparing
depreciation schedules.
The scale of its business meant it
could prepare the reports in a
Save Thousands of Dollars
Each Year in Claimable
Deprecation…
Investors are missing out on
thousands of dollars worth of tax
deductions by failing to take
advantage of depreciation
benefits, according to CBRE.
The real estate services
company last week launched a
tax depreciation service aimed at
Australian residential property
investors.
―It‘s astronomical the number of
people who are unaware of the
depreciation benefits that are
available to them,‖ said CBRE
Capital Allowances National
Director Neale Scott who leads
the division.
―Owners of new properties could
often claim 2 to 4% of the
purchase price in depreciation in
the first year of ownership,‖ Scott
said. On a newly constructed
property purchased for $400,000,
for example, the depreciation
benefit could be between $8,000
and $14,000 in the first year. But
www.propertyrentalsbrisbane.com FREE Information Guide For Landlords & Tenants
shorter time frame than many of
its competitors. It aims to deliver
depreciation schedules to its
clients within five to 10 days.
―For every depreciation schedule
that we do, we fully inspect the
property which is also a massive
point of difference,‖ Scott said.
The service is available across all
metropolitan areas and CBRE
launched its Capital Allowances
business in Australia about 12
months ago, initially targeting
commercial and agribusiness
sectors. ―The addition of a
residential platform enables us to
offer a full suite of property and
tax depreciation services across
all sectors,‖ Scott said.
The business specialises in
f o r m u l a t i ng d e p r ec i a t i o n
schedules and prov id ing
associated advisory services,
including preparing property
re insta tement cos ts and
depreciated replacement cost
assessments.
Source: Property Observer – 22
September 2014
6 October Labor Day (Office Close) 15 October Mid Month Accounting 3 November End of Month Accounting
A Selection of Properties Recently Leased
Bellbowrie House $370 p.w.
3 bed, 2 bath, 2 car accommodation
Quote
―Man never made any material as resilient as the human spirit.‖
—Bernard Williams
Bardon House $550 p.w.
3 bed, 2 bath, 1 car accommodation
RE/MAX Profile Real Estate 141 Boundary Road TEL 07 3510 5222 FAX 07 3876 5544
www.profilerealestate.com.au Bardon QLD 4065 Chris [email protected]
www.propertyrentalsbrisbane.com PO Box 388, Paddington, 4064 Helen [email protected]
Julie [email protected]
Errors & Omissions: These details have been prepared by us on information we have obtained and while we trust it to be correct, is not guaranteed by us and you should rely on your own enquiries.
Hawthorne Unit $595 p.w.
3 bed, 2 bath, 2 car accommodation
Calendar of Events
Hi Chris, Great news. Cant thank you enough for your prompt & cheerful service. Cheers, Tony Young
Another happy customer—Wow Moment