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Landlords' Newsletter Christmas Edition 2014
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In this edition: How long will it take for your property to rent? 7 Ways to Beat Bank Valuations Frequently Asked Depreciat ion Questions
December 2014
A Selection of Properties Recently Leased Quote Another happy customer—Wow Moment Calendar of Events
Dear Landlord,
Christmas is almost upon us and all
this hot weather makes pretend
snow even sillier... So instead of
snow, as you know - we get storms!
Properties can incur damage at
random moments so please make
sure all your insurances are in place
and up to date as quickly as possible
as it would be terrible for you
to receive any unpleasant financial
surprises due to your insurance
having lapsed.
And speaking of keeping up to date
we're pleased to report that all of our
inspections have been done and
Holiday team and rental updates
we're finalising the last of our leases
for the first few months of the year. If
you haven't already done so it's
urgent for you to please issue us
with your instructions for leases
expiring to the end of March. We'll
be disbursing funds to you this
Friday, the 19th of December, and
then the next disbursement will be
on the 5th of January 2015.
We're thrilled to welcome Joshua
Vecchio as our in-house broker. In
the role of helping our clients
improve the profitability of their
investments he may give you a call
sometime to see if we can further
help you.
We also wish to let you know that
we'll be working all through the
holidays with a skeleton staff on
board every day except Christmas,
Boxing, and New Year's days to
ensure we rent as many properties
as possible and keep on top of the
rent payments during that time. Julie
& Brittney will hold the fort while the
rest of the team take a well deserved
break before the new year silly
season!
We sincerely thank all of you for all
the support you have given us
throughout the year/s and wish you
all a prosperous and pleasurable
New Year.
Christina and the team Helen, Julie,
Lisa, Haleigh and Brittney
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 November.
BRISBANE STATISTICS The Market
Source: rentfind.com.au
7 Ways to Beat Bank
Valuations
Nobody wants to get a poor
valuation for their property, it
can affect future investment
plans or even their overall net
asset position so we have
put together 7 top tips to
ensure you win every time you
get a bank valuation.
article we talked about banks
not accepting valuations
carried out by investors or
appraisers who are not listed
in their preapproved panel.
Ask the lender who is in their
p reapp roved pane l o f
appraisers are and pick one
located closest to the property.
Although it may not be
accepted by the lender,
investors can meet the
Research: As with any part of
real estate, researching is key.
Investors should visit a few
Realtors in the local area and
try and find sales of similar
properties to give them a
rough ballpark figure. Note:
Realtors generally price
properties slightly above what
they are worth giving investors
the ‘best price on the day’
valuation. Some may even
show sales of properties which
may not be comparable. Our
advice would be to visit the
properties cited by the Realtor
and see for yourself if they
are in fact similar.
Private valuations: In this
Brisbane, QLD November 2014 Annual Change
Median Weekly Rent - House $415 1.2% increase
Median Weekly Rent - Unit/Apartment $390 1.3% increase
Days on Market (Avg) 29.3 3.7 increase
Days Vacant (Avg) 17.2 2.1 increase
www.propertyrentalsbrisbane.com FREE Information Guide For Landlords & Tenants
appraiser at the property and
speak with them at length to
gain a better understanding of
things and receive a fair
valuation. Chances are the
lender will then use the same
person to run their own
valuation, and come back with
an identical figure. Note: A
typical valuation will set
investors back around $500,
be sure to tell them it will
be used to obtain a mortgage.
Estimating the value of your
property: Every lender
application form will have a
question asking the investor
how much their property is
worth. Providing a slightly
higher estimation (by 5-10%)
does no harm, but don’t go too
high as it will most likely
be ignored.
Timing: If the current housing
market is on a downtrend,
chances are the value of
properties will be also be less
than desirable. For investors
who are looking to investment
in more properties and wish to
Investors who feel the
valuation conducted on their
property is unjust can appeal
by showing support ing
evidence to back their
challenge. Such evidence can
include comparable sales that
happened recently which may
have been over looked by the
appraiser, without evidence
the challenge will not get very
far. A second option is to ask
the lender to run a second
valuation of the property
usually at the expense of the
investors, though they may not
always agree to this.
Changing lenders: After
im p lem en t i n g a l l t i p s
suggested in this article,
investors who still somehow
managed to get a poor
valuation can change lenders
and try again.
Have you had a bad valuation
on your property? Need a help
with managing the process?
Please contact Joshua
Vecchio today on 0432 989
866
leverage the equity in an
existing property to purchase a
new one, wait until the
property appreciates before
getting a valuation.
Types of valuation: Newly
renovated properties that have
received a makeover will gain
a much more favourable
valuation with a full valuation
than either an outside or
desktop valuation. On the
other hand, properties with
poor interior would be better of
with an outside or desktop
valuation. Note: Investors can
potentially influence which
type of valuation their property
receives. By opting for a loan
of 80% with mortgage
insurance will guarantee the
bank will perform a full
valuation. Investors can later
reduce the amount borrowed
after valuation has taken
place. We suggest asking the
bank if they can provide a full
valuation first before going
down this road.
Chal lenging va luat ions:
www.propertyrentalsbrisbane.com FREE Information Guide For Landlords & Tenants
If a residential property was build
before1987 is it too old?
No, investment properties do not
have to be new. Both new and
old properties will attract some
depreciation deductions; it is a
common myth that older
properties will attract no claim.
Previous year’s tax returns can
also be adjusted. If a property
owner has not maximised their
depreciation deductions, the ATO
allows adjustments to tax returns
up to two financial years old.
How does BMT calculate a building’s age?
The age of the building can be determined by obtaining council
documents with dates pertaining to the original application approval
date or the occupancy certificate date and final inspection date. The
Quantity Surveyor will conduct the relevant searches to accurately
determine the age of a building. This includes historical council
searches regarding lodged development applications, as well as
occupancy certificates and certified final inspections.
What is the difference between plant and equipment and the building
write-off allowance?
Plant and equipment items are assets that can be ‘easily’ removed
from the property, as opposed to items that are permanently fixed to
the structure of the building. Plant items also include electronically or
mechanically operated assets, even though they may be fixed to the
structure of the building.
Plant and equipment items include, but are not limited to:
Frequently Asked
Depreciation Questions
What is depreciation?
As a building gets older and
items within it wear out, they
depreciate in value. The
Australian Taxation Office (ATO)
allows property investors to claim
a deduction relating to the
building and fixtures it contains.
Depreciation can be claimed by
any owner of an income
producing property. This
deduction essentially reduces the
investment property owner’s
taxable income.
Carpets Hot water systems
Ovens Blinds
Rangehoods Cook tops
Door closers Garage door motors
Freestanding furniture
Air conditioning sys-
tems
The building write-off allowance (also known as division 43) is based
on the historical construction costs of the building and includes such
items as bricks, mortar, walls, flooring and wiring.
www.propertyrentalsbrisbane.com FREE Information Guide For Landlords & Tenants
What is pooling?
Low-value pooling is essentially a
method of depreciating plant
items within an investment
property at a higher rate to
maximise the deductions more
quickly. The following categories
of depreciating assets can be
allocated into a low-value pool
and claimed at a higher tax rate
to maximise deductions:
Low-cost pool: A low-cost asset
is a depreciable asset that has a
cost of less than $1,000 in the
year of acquisition.
Low-value pool: A low-value
asset is a depreciable asset that
has an un-deducted value of less
than $1,000. That is, the cost of
the asset is greater than $1,000
in the year of acquisition, but the
v a l u e r e m a i n i n g a f t e r
depreciating over time (opening
Why does the depreciation and
capital allowance schedule last
forty years?
The ATO has determined that
any building eligible to claim the
building write-off allowance has a
maximum effective life of forty
years from the date construction
was completed. The owner can
generally claim up to forty years
depreciation on a brand new
building, whereas the balance of
the forty year period is claimable
on an older property.
Can the building owner claim
renovations completed by the
previous owner?
Yes. Anything in the property that
is part of a previous renovation
will be estimated by our Quantity
Surveyors and deductions calcu-
lated accordingly. This includes
items which may not be so obvi-
ous, for example, new plumb-
ing, waterproofing and electrical
wiring. For capital improvements
to qualify for the division 43 build-
ing write-off, they must have
commenced construction within
the qualifying dates.
value less the deductions in year
one, less the deductions in year
two, etc) is now less than $1,000.
Assets meeting both of these
classifications can be placed in
an itemised pool. Pooling is used
in conjunct ion wi th the
diminishing value method to
maximise deductions in the initial
years of the depreciation
schedule.
Who is qualified to estimate
c o n s t r u c t i o n c o s t s f o r
depreciation purposes?
Quantity Surveyors are qualified
under the tax legislation TR97/25
to estimate construction costs for
depreciation purposes and are
one of a few select professionals
who specialise in providing
depreciation schedules. Ensure a
depreciation specialist like BMT
Tax Depreciation is used to
prepare a depreciation schedule.
Article provided by BMT Tax
Depreciation.
Bradley Beer (B. Con. Mgt, AAIQS,
MRICS) is the Managing Director of
B M T T a x D e p r e c i a t i o n .
Please contact 1300 728 726 or
visit www.bmtqs.com.au for an Aus-
tralia-wide service.
25th December 2014 Christmas Day (Office Closed) 26th December 2014 Boxing Day (Office Closed) 1st January 2015 New Year’s Day (Office Closed) 5th January 2015 End of Month Accounting
A Selection of Properties Recently Leased
Fortitude Valley Apartment $495 p.w.
2 bed, 2 bath, 1 car accommodation
Quote
"He who has health, has hope; and he who has hope, has everything."
—Thomas Carlyle
Indooroopilly Townhouse $480 p.w.
3 bed, 3 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 Brittney profilemanager@remax.com.au
www.propertyrentalsbrisbane.com PO Box 388, Paddington, 4064 Helen helenbryan@remax.com.au
Julie profilerentalsteam@remax.com.au
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.
Sinnamon Park House $500 p.w.
5 bed, 3 bath, 2 car accommodation
Calendar of Events
Another happy customer—Wow Moment
For the lease of our house, we contracted with RE/MAX Profile Real Estate. Both Brittney and Helen immediately impressed us with their knowledge of the market, further to their professionalism and commitment to their words. They were quick to follow-up on all stages of the process, and kept us informed of developments at each point in time. We greatly appreciated their efficiency, extensive knowledge. and open and immediate communication, and would not hesitate to recommend their services to our friends and family. Suvena Indooroopilly
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