Landlords' Newsletter December 2014

In this edition: How long will it take for your property to rent? Houses Versus Units – Which Will Give You Better Tax Deductions? To Vacate or Not to Vacate… When is the Best Time to Renovate? Cutting the Red Tape – New Industry Laws Set to Improve Real Estate Operations!

December 2014

Reforms Needed to Remove Strata Title Straightjackets… A Selection of Properties Recently Leased Quote Calendar of Events

Dear Landlord,

Christmas count down is well and

truly upon us and with it has

arrived the storm season, with

last week's massive storm the

biggest in thirty years! It

damaged a huge selection of

properties on our rent roll and the

team has worked non-stop to see

that insurance claims are in

progress and emergency repairs

are being made ASAP. Please

remember to check that all your

necessary insurances are in

place and up to date. As the

recent storms have reminded us -

Team updates and holiday schedule

properties can incur damage at

random moments and no one

wants to receive any unpleasant

financial surprises with insurance

out of date or from a sneaky fine

print!

Many of you have leases expiring

between now and March so

please let us know your

instructions as soon as we can;

we're working on renewing as

many leases as possible

between now and Christmas to

have everything ready for the

new year. We will be working all

through Christmas with a

skeleton staff on board every day

except Christmas, and Boxing

and New Year's days to ensure

we rent as many properties

during that time as possible.

This month we farewelled Chris

and welcomed Brittney to our

team. Brittney comes to us with

seven years experience in the

business and she is absolute

dynamite - we're confident you're

going to love her as much as we

do!

Wishing you a safe, peaceful and

joyous holiday season,

Christina and the team Brittney,

Helen, Julie, Lisa & Haleigh

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. Our office’ Average Days on Market is 24.2 and Average Days Vacant is 18.8

BRISBANE STATISTICS Source: rentfind.com.au

Houses Versus Units –

Which Will Give You Better

Tax Deductions?

One question we are often asked

by property investors is, ―Why

does a unit obtain more

depreciation deductions than a

house?‖

Although it‘s not always obvious

what differences in depreciation

deductions there are between

choose to invest in.

Units also often contain more

fixtures and fittings than a house,

allowing the owner to claim

against many items within the

unit (e.g. lights, carpet and

dishwashers). In addition to this,

unit owners may be eligible to

claim a share of common

property, which is defined by the

Australian Taxation Office (ATO)

as ‗areas within a complex or

property types, it can be very

useful knowledge for any

property investor.

When looking at depreciation

deductions, there are several

factors that affect the final

calculation. These include the

purchase price of the property,

the construction commencement

date, the settlement date, the

land value (where relevant), and

the value of fittings and fixtures

located within the property.

Due to the amount of

infrastructure involved in the

construction of a residential unit

compared to a house or

residential property, your overall

claim can be greatly impacted

based on type of property you


development that are shared between owners‘, such as driveways,

pools, outdoor furniture, lifts, and fire stairways. Common property

represents one of the most significant differences between houses and

units for depreciation purposes, though deductions can only be claimed

for these in select states.

The example below offers a comparison of depreciation deductions for

a unit and house. After the first five years of ownership, the table

shows the unit having accumulated $17,500 more in depreciation

deductions. This is despite both properties having the same purchase

Surveyor‘s construction cost

knowledge and capability to

a c c u r a t e l y d e t e r m i n e

depreciation deductions, it is

difficult to obtain accurate

depreciation deduction estimates

for an investment property. Most

importantly, the ATO will not

recognise their figures in a tax

return. Consulting a Quantity

Surveyor guarantees the investor

their maximum ava i lable

deductions.

To provide these deductions,

usually a Quantity Surveyor will

conduct a site inspection to

establish the precise number of

plant and equipment items on the

property as well as to take

measurements, photos, and

notes in order to enhance a

depreciat ion schedule. A

Quantity Surveyor can also

determine the correct share of

the common property a property

investor is entitled to claim based

on factors such as the unit‘s size,

position within the development,

and even its view. They are able

to do this even by looking at a

development‘s building plans.

Following a Quantity Surveyor‘s

consultation, if an investor is

audited by the ATO, their

Note: When purchasing a strata unit there are other costs, such as

strata fees, to consider as an ongoing cost of ownership.

Quantity Surveyors are one of the only professions recognised by the

ATO as qualified to estimate construction costs for depreciation

purposes (TR97/25). As a building gets older, natural wear and tear

depreciates the value of the property and its items. The ATO then

allows property owners to claim this depreciation as tax deductions.

Any property owner who obtains income from their property is entitled

to make a depreciation claim.

Despite most investors being aware that they can claim deductions

based on the building structure and the plant and equipment items of

their unit, many are unaware that they may be able to claim

depreciation on common areas as well. To obtain the most accurate

and financially rewarding return, it is worthwhile for investors to consult

a professional Quantity Surveyor to maximise depreciation claims.

While Accountants and Real Estate Agents are able to estimate

depreciation figures on occasion, without a professional Quantity


depreciation claim will then be

supported by solid documented

evidence. Adding to the benefit of

a property investment‘s complete

depreciation schedule, any fees

of a Quantity Surveyor are 100%

tax deductible, as far as they

extend to the production of a

depreciation schedule.

If considering an investment

property, please do not hesitate

to contact BMT Tax Depreciation

on 1300 728 726. Our staff are

always happy to answer any

questions relating to property

depreciation. You can also easily

est imate the depreciat ion

deductions you may receive by

using the free BMT Tax

Depreciation Calculator. This can

be downloaded as an app to your

smart phone for free at

www.bmtqs.com.au/calc so that

you can work out deduction

estimates even while inspecting

your potential investment

property.

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

Australia-wide service.

To Vacate or Not to Vacate…

When is the Best Time to

Renovate?

Q: I‘m thinking of doing some

cosmetic renovation on our rental

property, but at the moment, it‘s

still tenanted. Do I wait for the

tenant to vacate first before

getting started or can I get

access to the property while

tenanted? What‘s the best way to

plan a cosmetic reno involving

painting and kitchen upgrade?

What do I need to take into

account and what are the traps I

need to watch out for?

A: Ideally, you want your rental

property vacant for any

significant renovation. If you have

incredibly obliging tenants you

might be able to get access to

update a vanity here or do a spot

of retiling there, but it would be

impractical, if not impossible, to

lay new floors or have an entire

house painted with tenants in

site. The best scenario is to have

the house vacant, get in and do

the renovation as quickly as

possible ( 1 to 2 weeks downtime

maximum ) and get the property

straight back on the market for

rent.

As for the order of works for the

painting and kitchen upgrade, it

does depend on the extent of

renovation you're planning. If

you're pulling out the existing

kitchen to put in a new one, then

I'd suggest painting your ceilings

and any exposed walls before

your new kitchen goes in. Then

you'll only need a few touch-ups

afterwards, instead of clambering

all over your nice new kitchen

to do a full paint job.

My biggest tip for planning a

cosmetic renovation, especially if

you're a novice, is to produce a

project plan that itemises the

tasks to be done and in what

order. From this, you'll see what

tradespeople you need to hire,

when they'll be required and how

many times they'll need to visit

your site.

For example, in a kitchen

renovation, you'll need to get

your sparkie and plumber out at

the start to disconnect wiring and

plumbing before you begin

demolishing the old kitchen. If

you're switching around power

points or putting in new plumbing,

you'll need them back again to

"rough in" new pipes and wiring

before the new kitchen goes in.

Then they'll have to come back at


In your view, does adding one

make financial sense?

A: Do bathrooms add value?

Unquestionably, yes. The idea to

convert your apartment into a

2-bedroom, 2-bathroom space is

a great idea, provided it doesn't

clutter or reduce practicality in

other rooms. The issue with

apartment renovating, however,

is that you have a lot of

l im i t a t ions c ompa red to

renovating freestanding houses.

First up, you need to get strata/

body corporate approval for any

renovations that fall outside of

minor works. For a completely

new bathroom, it's likely you'll

also need to get local council

approval, no doubt with reports

tagged on from structural engi-

neers, etc. Then there are the

practical challenges. Laying new

electrical and plumbing lines in

an apartment can be extremely

difficult and cost-prohibitive if you

don't have easy access to floors

and walls. And don't assume you

can just jackhammer into the

walls, f loors and ceiling.

I've renovated a few apartments,

and in all cases, I wasn't allowed

the end to connect all your

appliances, power points and

plumbing. All this will have to

dovetail with other tradies

working on your new kitchen,

such as the installer, tiler, etc.

Are you getting the picture? If

you're not organised and

knowledgeable enough about

what needs to be done when, I'd

suggest hiring a project manager

to produce the project plan for

you and you can go from there.

Alternatively you can source a

kitchen installation company to

do it all for you. However, there

will be extra charges associated

with someone else project

managing your renovation for

you. 'Winging it' is the surest path

to disaster.

What You Need to Know When

Adding a New Bathroom!

Q: I just bought a large

2-bedroom unit and I was told by

the agent that I could add a new

bathroom to make it more

attractive to tenants. Without

seeing the floor plan, what

information would you be

checking first before considering

a second bathroom? How

feasible is it to add one for units

and what are the difficulties?

to touch any of these things. This

makes it very challenging to

conceal large plumbing pipes and

electrical lines and still achieve a

good looking space. Not

impossible, but you'll need to

work with your team of tradies to

find creative solutions that are

also legally compliant. Then there

can be noise issues that affect

neighbours and difficulties of

getting materials up and down

lifts or stairs, etc.

To start with, I'd suggest you first

need to establish if your

apartment really does have

space to accommodate a second

bathroom, then call in a plumber

and electrician to give you an

estimate of the costs involved

and what difficulties you're facing.

Then work out if the extra rent

you can get for a 2-bathroom,

2-bedroom apartment justifies the

cost. Adding a second bathroom

is not an easy thing to pull off in

an existing apartment block, so

make sure you do your

homework up front before

How to Transform Your Tired

Bathroom for Only a Few

H u n d r e d B u c k s …

Q: If you were to transform a tired

-looking bathroom at the lowest

Cutting the Red Tape – New

Industry Laws Set to

Improve Real Estate

Operations!

New laws for property agents,

used motor dealers, chattel

auctioneers, debt collectors and

process servers will commence

on 1 December 2014.

The new laws replace the

Property Agents and Motor

Dealers Act 2000, which has

grouped the regulation of several

industries together for more than

13 years.

Fair Trading Executive Director

Brian Bauer confirmed the

Government had set 1 December

2014 as the commencement

date.

"The Property Agents and Motor

cost possible, what would you

do? What ways would you add

the wow factor without gutting it?

A: For anyone wanting to

renovate a t i red - look ing

bathroom for the absolute lowest

possible cost, head straight to

your nearest big hardware store

and check out the range of

products by White Knight and

Rust—Oleum.

These companies specialise in

a whole range of innovative

paint and resurfacing products

designed to conceal all manner

of dated surfaces. There‘s

tile paint, laminate paint for old

vanities, epoxy paint for old

basins and baths… for a few

hundred dollars maximum, you

can completely transform a

bathroom with fresh, neutral

colours, and without the need

for a single tradie.

Then just add new tap ware,

vanity handles, towel racks, etc,

also picked up cheaply from any

hardware store. You simply can‘t

get better bang for your buck! As

for the wow factor, I‘d suggest

taking a leaf out of the stylist‘s

book, and let smart towels,


Dealers Act has been split along

industry lines to provide simpler

regulation, allowing Government

to be more responsive to the

changing needs of each industry

into the future," Mr Bauer said.

"Key changes for the real

property industry include the

removal of the cap on real estate

commissions, the deregulation of

some licence classes, the

streamlining of forms, and the

incorporation of a simplified

warning statement into contracts

for the sale of residential

property.

"The used motor vehicle industry

benefits from a significant

reduction in the amount of

paperwork involved in the

purchase of a car.

"Regulations requiring licensees

to display their licence in their

office and keep an employment

register have been removed.

"These news laws should

streamline the day-to-day

operations of businesses in these

industries.

"Peak industry bodies and

consumer organisations were

stylish toiletries and maybe even

a well-placed pot plant provide a

bit of glam. They‘re much easier

to change than a splash of trendy

feature tiles that suddenly go out

of fashion.

Source: Your Investment Property

Magazine: October Edition 2014

choosing apartment living, strata

rules and regulations need to

relax or investors will be held

back, according to an industry

body.

Ken Morrison, chief executive of

the Property Council of Australia,

said as our cities become denser,

strata titles will become more

prevalent and the system

represents an ―important form of

ownership‖ for both residential

and commercial property.

Mr Morrison, however, said it

currently comes with some

severe disadvantages.

―It requires 100 per cent of

owners to agree to wind up the

scheme at the end of the

building‘s physical or economic

life,‖ he said.

―Nothing lasts forever. As our

cit ies evolve and grow,

strata-titled buildings will need to

be refurbished, renewed or

demolished. However, getting

unanimous approval from even a

dozen owners is a big challenge,

but a few hundred is well-nigh

impossible.‖

consulted throughout the reform

process.

"OFT is running an extensive

education campaign to prepare

industry for the new laws."

The following Acts commence on

1 December 2014:

Property Occupations Act

2014

Motor Dealers and Chattel

Auctioneers Act 2014

Debt Collectors (Field Agents

and Collection Agents) Act

2014

Agents Financial Administra-

tion Act 2014

Fair Trading Inspectors Act

2014.

For a full list of reforms, visit

www.fa i r t rading.q ld.gov.au/

p a m d a - s p l i t ( h t t p : / /

www.fa i r t rading.q ld.gov.au/

pamda).

Source: Fair Trading QLD –

4 November 2014


According to Mr Morrison, the

current system is ―a strata title

straightjacket which risks locking

up our cities‖.

He said the Property Council is

renewing calls for a lower

threshold and clearer renewal

processes to guide owners

through a scheme termination –

but conceded some states and

territories are already making

moves in this direction.

―Recently the WA government

proposed a majority threshold for

schemes of 10 or more lots which

are more than 15 years old,‖ he

said. ―This month the NT

par l iament w i l l cons ider

legislation to do the same. Both

are positive moves showing

policy movers are thinking about

the future."

Mr Morrison said these proposals

could act as a template for other

states, such as NSW, ―where

reform momentum seems to

have stalled‖.

Source:

smartpropertyinvestment.com.au –

11 November 2014

Reforms Needed to

Remove Strata Title

Straightjackets…

With more and more people

moving to the capital cities and

16th December 2014 Mid Month Accounting 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

Indooroopilly House $670 p.w.

4 bed, 2 bath, 3 car accommodation

Quote

"We can't help everyone, but everyone can help someone.”

—Ronald Reagan

Sinnamon Park House $650 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.

Mount Gravatt Apartment $420 p.w.


Calendar of Events

Landlords' Newsletter December 2014

Documents

Transcript of Landlords' Newsletter December 2014