What is property depreciation and how can it help you?

Properties and the plant and equipment assets contained within them all go through a process of wear and tear.The Australian Tax Office (ATO) allows property investors to claim tax deductions based on this wear and tear. This claim is called property depreciation.

Depreciation deductions will significantly improve a property investor’s cash flow. Research shows the average investor can expect between $5,000 and $10,000 in deductions in their first year’s claim alone. Despite the potential returns, research shows 80% of property investors fail to claim depreciation.

Investors can claim two types of property depreciation. Capital works deductions are available for the structural elements of a building; such as roofs, windows and doors. These deductions can be claimed against the building’s historical construction cost at a rate of 2.5% each year for up to forty years.

There are some restrictions however. Capital works deductions only apply to residential buildings constructed after 15^th of September 1987. Despite this fact, the owners of older buildings are eligible to claim depreciation deductions for the plant and equipment items contained within the property as well as for any more recent renovations completed.

Plant and equipment depreciation can be claimed for mechanical or removable assets. Examples include carpets, hot water systems, blinds and light fittings.  These deductions are calculated based on an individual effective life assigned to each asset by the ATO. A dishwasher for example has an effective life of ten years and will be depreciated at a rate of 20% each year.

By educating your clients about property depreciation, not only will you assist their cash flow, but you will also add value to your own service. In turn, investors will be more likely to use your service again when expanding their investment portfolio.

BMT Tax Depreciation offers a complete range of complimentary services for property professionals including training, educational material, webinars, estimates and articles. To find out more visit the BMT Property Professionals page by clicking here. Alternative you can contact one of our friendly staff on 1300 728 726.

Article provided by BMT Tax Depreciation. 
Bradley Beer (B. Con. Mgt, AAIQS, MRICS) is the Managing Director of BMT Tax Depreciation.  

Please contact 1800 661 662 or visit www.bmtqs.com.au for an Australia-wide service.

Changes to the NSW Residential Tenancies Act 2010

Under the RTA 2010, when an owner decided to place the property on the market for sale, a tenant was able to terminate a fixed-term agreement without compensation to the landlord (even if the landlord did not intend to sell before the agreement was entered into, but subsequently decided to do so)

The revised changes to the act this month will allow the tenant to terminate a fixed term agreement if the landlord notifies them of their intention to sell – unless the landlord disclosed the proposed sale of the property before entering into the agreement as required by section 26, then tenants will be unable to terminate the fixed term agreement.

As a reminder section 26(2) requires a landlord or landlord’s agent to disclose to a tenant, prior to the tenant entering into a residential tenancy agreement, any proposal to sell the premises but only if a Contract for Sale has been prepared.

We recommend that you include as part of your process when signing a new lease that the question is asked of the landlord if they are considering selling the premises during the fixed term. In which case it is necessary to disclose this information to the tenant to ensure that they cannot give notice should the landlord go ahead with the sale during the fixed term.

Real Plus have added a step on their New Tenancy Procedure template to ensure this step is added to your new tenancy process and we would suggest you do the same on your internal checklists and procedures.

Any queries on this don’t hesitate to call us on 02 8355 4999

When do I get my bond back?

When do I get my bond back?

At Real+ we often like to take a moment to think about things from the tenants perspective. This allows us to not only improve the property management process to make things as streamlined and easy for us as possible, but also gain a greater perspective of understanding when communicating and dealing with tenants.

This week I took a moment to think about things from the tenants perspective at the time of vacate, final inspection and bond refund.  I took a moment to think back to the times I have myself vacated from a property, what my expectations were compared to what happened, and then put that into perspective as to how I had handled vacating tenants as a property manager. This vacate stage seems to be one property management function that is handled quite differently from agent to agent.

Some questions I felt went unanswered as a tenant (despite my own property management knowledge, and the receipt of a generic vacate letter) were around when they planned to show prospective tenants through the property, whether I was supposed to drop the keys to their office, when I would be meeting them for the vacate inspection, and most importantly (the most common frustration of tenants and hardest things for a property manager to guarantee):

• How long would it be until my bond was refunded?

Most tenants are relying on and budgeting on that money for some purpose so understandably they get frustrated when it’s not as easy as keys back, bond back. As a property manager, I know I couldn’t guarantee a time frame for the tenant as to when they would get their bond back, it depended on whether they’d returned the property in good condition, if it was clean, if extra work was required, if all the keys were returned, how quickly the landlord confirmed it wass okay to release the bond etc. So many variables.

If we can’t 100% guarantee the time frame, what can we control? How can we avoid an angry tenant at the vacate inspection? Well not only can we control how we communicate the process, but also how we provide expectations to the tenant across the vacate process. This will help alleviate some frustrations. Often we know what the process is and what the tenant can do to ensure they have the best chance of a speedy bond refund, however we are not communicating this to them each time.

Next time instead of sending out the generic vacate letter, why not provide the tenant with an outline of the process and what steps they can take to ensure their bond is refunded as quickly as possible! We have created a handy checklist you can provide to your tenants when they are vacating called the “How to ensure a Speedy Bond Refund Tenant Checklist,” click here for your copy.

If you are Real+ member, click here to visit Real TV where you can watch our webinar on Condition Reports!

Property Investment Tips to Assist Your Landlords

There is a common perception that in order to own an investment property, you must be a wealthy investor with money to burn. The reality is that the opposite is more likely to be true, with many landlords overwhelmed by the actual cost of owning an investment property, which leaves many property managers wondering why the landlord was un-obliging over agreeing to a $100 repair.

As a property manager, it is essential to fully understand how much it costs an owner to own an investment property, and the type of investor they are in order to meet their needs, expectations and build the relationship (and of course provide better understanding and advice when convincing them to agree to the $100 repair).

There is fantastic 60 minute webinar within the Real+ membership called “Walking in the shoes of your investor” (presented by Fiona Blayney) to assist in training yourself and your property management teams on this important subject.

In this Real+ training webinar Fiona Blayney refers to the property management concept of Intentional landlords vs Accidental landlords.

• An intentional landlord made a decision to invest in property and has likely worked hard to own property, therefore has purpose and a plan.
• An accidental landlord may be one that has inherited property, has influence from parents, was unable to sell, someone who may be combining a household, or couldn’t afford mortgage.

Can you see that not only the needs of that landlord, but the financial motivations and challenges of the two will be very different? One group will understand the costs of investment much better, whereas the latter will not like or understand a lot of expenses.

We get amazing feedback from property managers on this training webinar – helping them to finally understand what it costs a landlord and see things from their perspective, making their lives easier not only in day to day dealings but also boosting their long term relationships with the client.

As a property manager it is important to understand what it actually costs the landlord to maintain an investment property, and the type of investor you are dealing with in order to build the relationship and have them trust in your service. But don’t try to figure it out on your own, next week, Real+ presents another property management live webinar on the topic. 

If you are Real+ member, click here to visit Real+TV where you can watch our webinar with special guest expert Chris Gray: Wealth Creation for Your Landlords.

What is the Key to Appraisal Success?

Preparation is KEY!

Preparation in any area of property management is the key to success, none more important than the appraisal of new business. Many a time, an appraisal is rushed from a precious appointment without allocating the proper time required for research and preparation - people aren't well trained to deal with and adapt to varying clients needs.

You can only get so far flying by the seat of your pants but you will be far better prepared to win a new client over if you've put in the time and effort to prepare personalised and relevant data and knowledge, and undergo regular training to prepare yourself to respond to their personal situation.

Pre-appraisal this may mean spending some more time on the initial call finding out a little bit more about the property, what their expectations are and perhaps their intentions, so that you can be best prepared to sell the information and service that they need, not necessarily what you assume they want.

Ongoing preparation means undergoing training on a regular basis, this will ensure your new business success and essentially, that you remain prepared for any situation that crops up.
 

The most successful new business people in the industry are both well prepared before the actual meeting and well trained, so they are adaptable to different clients needs and expectations.

Why not attend our webinar next week on Wednesday 12.30 where Fiona will guide you through essential preparation for the listing appraisal itself. As part of our New Business Bootcamp training series, we'll cover how you can be ready and prepared leading up to and the day of appraisal. 

If you are Real+ member, click here to visit Real+TV where you can watch our webinar: New Business Bootcamp - Preparing to List.