Landlords' Newsletter Christmas Edition 2014

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


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:

tel:0432%20989%20866

tel:0432%20989%20866


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.


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.


RE/MAX Profile Real Estate 141 Boundary Road TEL 07 3510 5222 FAX 07 3876 5544

www.profilerealestate.com.au Bardon QLD 4065 Brittney [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.

Sinnamon Park House $500 p.w.


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

Landlords' Newsletter Christmas Edition 2014

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Transcript of Landlords' Newsletter Christmas Edition 2014