RE/MAX Profile Landlords' Newsletter July 2015

In this edition: How long will it take for your property to rent? What are Your Rights and Responsibilities as a Landlord? Ways to Make Your Property Rental Ready

July 2015

How to Make the Most from Capital Gains Tax! A Selection of Properties Recently Leased Quote Calendar of Events

Dear Landlord,

Recent reports show that first

home buyers are beginning to

b e co m e m o re a c t i ve ,

contributing to a softening of

rental demand as they leave

the rental market for their first

mortgage. Investors are also

becoming increasingly more

active adding to supply. We

aim to keep vacancy levels

low but still ensuring that we

are getting “good” tenants for

our landlords.

EOFY Statements and July Rental Updates

Our multilingual team has

expanded recently to include a

Chinese agent who speaks

Mandarin, Cantonese and

English, making it easier for

communications with any

C h i n e s e t e n a n t s f o r

our landlords.

End of financial year is here

again and we will send you

your end of financial year

statements to assist you in

preparation of your tax

returns. If you have any

queries please do not hesitate

to contact us.

Best Regards,

Belinda Johnston

General Manager

Property Management

Winter is almost here… we recommend another Chimney

cleaning!

For $165 All Brisbane Chimney

will have your chimney cleaned

out, check seals, doors and caps

on the roof.

Call your property manager now to book!

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 June

BRISBANE STATISTICS The Market

Source: rentfind.com.au

What are Your Rights and

Responsibilities as a

Landlord?

All landlords (or lessors) in

Queensland have many rights

and responsibilities to consider.

The Residential Tenancies

Authority provides a guide for

landlords renting out residential

properties in Queensland.

Landlord insurance

As a landlord you are entitled to

insure your rental property to

cover yourself against possible

f inancial losses, including

damage to the property by

tenants. Landlord insurance

covers the building itself, with the

option of insuring any contents

that belong to you.

Tenant character and credit

checks

Tenancy databases list people

who have previously had

problems with their tenancies.

These problems may include not

paying rent or damaging

property.

Smoke alarms

As a landlord, you are

responsible for installing smoke

alarms in your property.

The Queensland Fire and

Rescue Service provides detailed

information on smoke alarm

legislation.

Brisbane, QLD June 2015 Annual Change

Median Weekly Rent - House $420 2.4% increase

Median Weekly Rent - Unit/Apartment $380 0.0%

Days on Market (Avg) 29.4 2.7 increase

Days Vacant (Avg) 17.4 1.6 increase


C o n t a c t a n i n s u r a n c e

company for more information on

landlord insurance.

Resolving disputes

To resolve serious problems

during a tenancy, your Property

Manager can:

phone the Residential

Tenancies Authority and

use the Dispute Resolution

Service

apply to the Queensland

Civil and Administrative

Tribunal.

More information

For more information on the

rights and responsibilities of

landlords, you can contact

the Residential Tenancies

Authority.

Source: https://www.qld.gov.au/

housing/renting/landlords-rights-

responsibilities/ Nov 2013

the tenancy (this includes ten-

ancy application forms that com-

mit a tenant to the rental of a

property if you choose their appli-

cation).

If you are planning on putting

the property up for sale within

the first 2 months of a fixed

term tenancy, check the rules

around selling a tenanted

property before signing up the

tenant.

Source: RTA Factsheet – Managing

General Tenancies in QLD

Ways to Make Your Property

Rental Ready

Before you rent out a property

make sure:

the property is clean and in

good repair

locks and security devices

are in good working order

there is a full set of keys for

one tenant and entry keys

for all other tenants

there are contact details for

emergency repairs

you decide if you will take a

key or holding deposit

you decide if you will take a

bond

you decide if you will

c h a r g e f o r w a t e r

consumption (your property

must be water efficient).

You must also ensure there is

nothing preventing the tenant

from moving into the property

(e.g. you may not rent out a

granny flat if it has not been

approved by the local council).

You must provide a copy of the

proposed tenancy agreement

that includes any special terms

before accepting any money from

the tenant or committing them to

How to Make the Most from

Capital Gains Tax!

One question investors often ask

about claiming depreciation on a

rental property is „how will these

claims affect Capital Gains Tax

(CGT) when the property is

sold?‟

CGT can be a complex topic for

investors to understand,

particularly as the answer to the

above question can really

depend on the scenario of the

individual property investor.

Introduced on the 20th of

September 1985, CGT is

basically the tax payable on the

difference between what it cost

https://www.qld.gov.au/housing/renting/landlords-rights-responsibilities/




deductions and plant and

equipment depreciation.

2. How do capital works

deductions affect CGT?

Capital works deductions are

available for the wear and tear on

the structure of the building.

Examples of items which can be

claimed include bricks, walls,

floors, roofs, windows, tiles and

electrical cabling. The capital

works deductions will reduce the

cost base of the property which

will add to the capital gain and

therefore increase the amount of

CGT applicable for the owner of

the property.

3. How does plant and

equipment depreciation

affect CGT?

Depreciation deductions can be

claimed for the mechanical and

easily removable plant and

equipment assets contained

within an investment property.

When a property is sold, a gain

or loss is calculated separately

on these items. This is because

often these assets will have been

updated, removed or replaced

you to purchase an asset and the

amount you received when you

disposed of it. In the case of an

investment property, this is the

difference between the original

purchase price of the property

including any capital buying costs

and the price the property is sold

for plus any selling costs. When

you sell an asset such as a

property, this triggers what is

called a „CGT event‟ and the

owner will either make a capital

gain or loss on the property.

When an investor has been

claiming property depreciation,

the cost base could be altered,

therefore changing the capital

gain or loss. To help explain the

imp l i ca t ions o f p roper t y

depreciation on CGT, here are

six facts investors should be

aware of.

1. W h a t i s p r o p e r t y

depreciation?

Property depreciation is the wear

and tear of a building and the

plant and equipment items within

it. The Australian Taxation Office

(ATO) allows owners of income

producing properties to claim this

depreciation as a deduction in

their annual tax return, meaning

they pay less tax. Property

depreciation is made up of two

main parts; capital works

over time. This means that the

original assets contained in a

property at the time of purchase

can be very different to the

assets contained in the property

at the time of sale.

If an investor were to increase

the value of plant and equipment

during the time the property is

owned (for example by replacing

the carpets or completing a

renovation) this could increase

the cost base of these assets and

may therefore reduce the CGT

when the owner sells the

property. If the value of assets in

the property when sold is less

than when purchased the cost

base will be reduced, therefore

increasing the amount of CGT.

4. What CGT exemptions

apply for a principal place

of residence?

Properties which are owned by

someone who resides, occupies

or lives in the property as their

home are exempt from CGT so

long as the dwelling is used

m a i n l y f o r r e s i d e n t i a l

accommodation and is located on

land under two hectares in size.


An owner did not use the

property to provide an

assessable income in any

part of the twelve months

when it was not their

primary place of residence

The new property becomes

the property owner‟s

primary place of residence

5. Are property investor‟s

eligible for a discount?

A 50% exemption on CGT is

available to individuals or small

business owners who hold an

investment property for more

than twelve months from the

signing date of the contract

before selling the property.

6. Is it still worthwhile claiming

property depreciation if it

will later add to the capital

gain?

The short answer is yes. During

the term of ownership, capital

works and plant and equipment

can be claimed as a deduction at

the investor‟s marginal tax rate.

These deductions will reduce tax

liabilities, therefore generating

additional cash flow for the

investor each year.

When a property is sold, if the

owner has held the property in

their name for more than twelve

months, the owner will be eligible

for the 50% exemption. This

means that only 50% of the

capital works deductions during

ownership will carry through to

the „CGT event‟, making it far

better for a property investor to

c la im the capita l works

deductions and take advantage

of the additional cash flow during

ownership. Depreciation claims

also provide an opportunity for

the property owner to invest

further or reduce loan liabilities.

When considering selling an

investment property, it is

recommended that investor‟s

seek advice f rom the i r

A c c o u n t a n t a b o u t t h e

implications of CGT and the

exempt ions ava i lab le . A

specialist Quantity Surveyor can

also provide advice on the

depreciation deductions for any

investment property.

Article provided by BMT Tax

Depreciation.

Bradley Beer (B. Con. Mgt, AAIQS,

MRICS) is the Chief Executive

Officer of BMT Tax Depreciation.

Please contact 1300 728 726 or

visit www.bmtqs.com.au for an

Australia-wide service.

If the owner of a primary place of

residence chooses to move out

of their home and rent it out, a

CGT exemption is available for

up to six years after they have

moved out so long as they don‟t

own another primary place of

residence.

If the owner moves back into

their investment property, then

moves out and rents the property

again, a new six year period will

commence from the time they

last moved out of the property.

There is currently no limit to the

number of times a property

owner can do this so long as

each absence is less than six

years.

Only one property can be classed

as a primary place of residence

and therefore exempt from CGT

at any one time with the

exception of the following rules

which apply if both properties are

treated as the owner‟s primary

place of residence within a six

month period:

The old property was the

owner‟s primary place of

residence for a continuous

period of at least three

months in the twelve

months before they sold it

15th July Mid Month Accounting 3rd August End of Month Accounting

A Selection of Properties Recently Leased

Stafford Heights House $450 p.w.

3 bed, 1 bath 1 car accommodation Quote

―If you wait until you can do everything for

everybody, instead of something for somebody, you'll end up not doing

anything for anybody‖.

—Malcom Bane

Toowong Townhouse $320 p.w.

2 bed, 1 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 Belinda [email protected]

www.propertyrentalsbrisbane.com PO Box 388, Paddington, 4064 Helen [email protected]

Lisa [email protected]

Iszabel [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.

Windsor House $710 p.w.

3 bed, 2 bath, 2 car accommodation

Calendar of Events

With end of financial year just around the corner our finance specialist Joshua Vecchio can

help with;

Interest in Advance, Home

Loan Health Check,

Depreciation Reports and

much more.

Call him now on 0432 989 866

RE/MAX Profile Landlords' Newsletter July 2015

Documents

Transcript of RE/MAX Profile Landlords' Newsletter July 2015