landlords' newsletter october 2014

In this edition: How long will it take for your property to rent? Split Your Costs and Save a Small Fortune! Solar Power Rebates for Your Rental Property – Who Benefits? Could the Current Boom Become a Bubble? Save Thousands of Dollars Each Year in Claim-able Deprecation…

October 2014

A Selection of Properties Recently Leased Quote Another happy customer—Wow Moment Calendar of Events

Dear Landlord,

Talk about summer warmth

hitting with a sting - and it's

only the start of October! It's

beautiful seeing everything

blossom: the jacarandas

resplendent and gardens

teeming with flowers. We

welcome back Helen from her

recent holiday while the team

was busy securing tenancies

for the vacant properties and

confirming lease extensions

for those tenancies ending in

Rental team updates and lease extensions

December and November this

year.

With gardens in full glory and

the weather so warm, now is a

perfect time if you're thinking

of listing your property for sale.

Buyers tend to enjoy attending

weekend opens and making

an outing of their hunt! Already

we're heading into festive

season (following on from the

Brisbane festival with and its

spectacular River Fire finale)

and soon enough it'll be a

round of pre-Chrissie events.

Oh the arduous life of a real

estate agent… Seriously,

we've been working our butts

off and are thrilled to be

getting great results!

Our office is closed on the

Monday 6th October 2014 for

"Labor Day".

Best Regards,

Chris McCall, Business

Development Manager & the

Team (Christina, Julie, Helen

and Lisa)

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 September.

BRISBANE STATISTICS The Market

Source: rentfind.com.au

Brisbane, QLD September 2014 Annual Change

Median Weekly Rent - House $410 2.5% increase

Median Weekly Rent - Unit/Apartment

$385 1.3% increase

Days on Market (Avg) 28.5 2.4 increase

Days Vacant (Avg) 16.8 1.4 increase

Split Your Costs and Save a

Small Fortune!

How split schedules can help

you save…

With property prices steadily ris-

ing, co-ownership of property is

becoming increasingly common.

Co-owning property with a friend,

family member or business

partner has the immediate benefit

of increasing an investor‘s

Many co-owners make the

m i s t a k e o f c a l c u l a t i n g

depreciation and then splitting

the deductions based on

o w n e r s h i p p e r c e n t a g e s .

However, depreciation legislation

allows co-owners to split an

asset‘s value by ownership

percentage first, potentially

qualifying them for higher rates of

depreciation. As a result,

co-owners are able to increase

their deductions substantially by

purchasing power while reducing

the burden of corresponding

expenses. Many investors are

unaware that co-ownership can

also substantially increase the

depreciation deductions both

owners can claim for an

investment property.

BMT Tax Depreciation can

provide a split depreciation

schedule for any investment

property that was co-purchased

by multiple parties. The most

common example of such an

arrangement would be spouses

purchasing an investment prop-

erty together. A split depreciation

schedule allows assets that are

co-owned to be depreciated

according to each owner‘s

interest in the assets.


writing off plant and equipment items far sooner using methods such as

low-value pooling and immediate write-off. BMT Tax Depreciation

specialise in depreciation and are able to structure a schedule in this

way to maximise deductions.

Low-value pooling

Low-value pooling is a depreciation method whereby an investor with

an ownership interest in an asset of less than $1,000 in value can claim

deductions at an accelerated rate of 18.75% in the year of purchase

and 37.5% each year afterwards. As each investor‘s ownership interest

may qualify for the low-value pool, co-ownership expands the number

of items that can be claimed at this higher rate of depreciation.

This method of assigning ownership interest also applies when

assessing which items qualify for an immediate write-off. Ordinarily an

asset‘s value must be under $300 to be completely written off in the

first year. However, co-ownership also allows for an immediate write-off

to be claimed for any ownership interest which falls below this value,

increasing the range of eligible assets.

The benefits of this are clear. For a property with a 50:50 ownership

split, any plant and equipment items worth up to $600 can be

immediately written off as a 100% tax deduction.

The tables below demonstrate the impact a co-owned, non-split

depreciation schedule versus a split depreciation schedule can have on

an investor‘s deductions.

By obtaining a split depreciation

schedule, the first year claim for

each owner went from $162 to

$356 and the second year claim

went from $168 to $221.

A hot water system purchased for

$1,450 is able to be depreciated

using the low-value pool, greatly

increasing the value of

deductions. The split schedule is

also able to allow the heat light

and exhaust unit valued at $440

to be written off immediately as a

$220 deduction for each of the

owners.

These increases in deductions

are made especially significant

when considering that this exam-

ple only accounted for two

assets, a small portion of the

assets typically found in an

investment property.

A split depreciation schedule is

available to any investors who co

-own an investment property,

whether they are husband and

wife, friends or business partners

and for any ownership ratio. By

utilising low-value pooling and

immediate write-off on the many

fixtures and fittings within an

investment property, investors

are able to discover potentially

thousands of dollars of additional


cash flow.

Article provided by BMT Tax

Depreciation.

Bradley Beer (B. Con. Mgt, AAIQS,

MRICS) is the Managing Director of

BMT Tax Depreciation.

Please contact 1300 728 726 or

visit www.bmtqs.com.au for an

Australia-wide service.

Solar Power Rebates for

Your Rental Property – Who

Benefits?

The Queensland Solar Bonus

Scheme is a government initia-

tive that pays eligible customers

for the surplus electricity gener-

ated from solar photovoltaic (PV)

systems which is exported to the

Queensland electricity grid. The

scheme is managed by the De-

partment of Energy and Water

Supply (DEWS).

While the Residential Tenancies

and Rooming Accommodation

Act 2008 (RTRA Act) does not

make specific reference to the

solar bonus scheme, it does

provide guidelines for service

charging.The RTRA Act allows a

lessor of a rental property to

charge a tenant for the quantity

of the service supplied to, or

used at, the property.

Although the RTRA Act does not

specifically state who is eligible

for the rebate, the Electricity Act

1994 does: the person who has

the electricity account in their

name is entitled to the bonus.

This means if the electricity

account is in the tenant‘s name

the tenant is able to claim the

bonus, or if the electricity account

is in the lessor‘s name, the lessor

is able to claim the bonus.

In some cases, the lessor may

set up the electricity account with

the supply authority in their own

name and then seek to recover

the charges to their account from

the tenant. If the rental property

is individually metered, the tenant

cannot be asked to pay more

than the amount charged to the

lessor by the supply authority for

the quantity of service used

(s165 (3bii), RTRA Act).

The ‗amount charged‘ is

ambiguous: the pre-rebate

amount is the maximum that can

be charged by the lessor. The

RTA strongly recommends the

lessor/agent/manager and the

tenant negotiate at the start of

the tenancy how the electricity

will be charged when a rental

property has solar power. Op-

tions include:

*The tenant has the electricity

account in their name. They pay

the account directly to the supply

authority and receive any rebate.

*The lessor has the electricity


the account, receive the rebate,

and ask the tenant to reimburse

them the full amount.



the account and the tenant is

asked to reimburse the lessor the

full amount minus the rebate

amount (e.g. $400 account, mi-

nus $150 rebate = $250 amount

payable by the tenant).



the account and receive the

rebate. The cost of the electricity

service is absorbed in the rent.

Details about electricity charging

should be included in the tenancy

agreement, which is agreed and

signed by both parties at the start

of the tenancy. If you cannot

agree about the payment of a

service by talking with each

other, you may apply for dispute

resolution through the RTA.

Source: RTA – September 2014


Perth, Canberra and Darwin are expected to be the worst performers in

this scenario, with Darwin‘s growth ranging from -3 per cent to one per

cent.

If rates were to fall in the first quarter of 2015, the weighted average

may creep up to around seven to 12 per cent.

However, if rates were to rise in mid- to late-2015, national growth may

be a more subdued three to six per cent.

In its September meeting minutes, the Reserve Bank signalled its

intention to keep rates at 2.5 per cent ―for the next year at least‖.

Mr Christopher said while prices were elevated, fears of a pricing

bubble were unfounded.

―The market is somewhat overvalued but not by as much as what some

have very publicly stated. I don‘t believe at this stage the market is in a

bubble,‖ he said.

―Some cities are heading into overvalued territory, but the point overall

is the market is far from a bubble situation when taking into account

historical valuations over the past 30 years.‖

The full results are reproduced below:

Could the Current Boom

Become a Bubble?

A new forecast by a leading real

estate expert has predicted the

housing market will continue its

strong momentum well into 2015.

According to the analysis by

Louis Christopher, from SQM

Research, prices still have room

to move over the coming 12

months.

In a scenario where rates remain

unchanged, the economy stays

steady and the Australian dollar

remains above 85 US cents, Mr

Christopher predicts the weighted

average growth of all cities will be

five to nine per cent.

In this scenario, Sydney would

continue to record outstanding

growth of eight to 12 per cent.

Melbourne and Brisbane would

be the next strongest performers

– Melbourne would record growth

of five to nine per cent while

Brisbane is tipped for five to eight

per cent growth.

Adelaide is also tipped for a pick-

up, with growth of four to seven

per cent, while Hobart could

experience growth of three to six

per cent. Source: Smart Property Investment – 18 September 2014

many investors did not know they

could claim such deductions by

obtaining a tax depreciation

schedule for the property.

―There is a lot of reliance on

accountants to do this work but

accountants are the ones who

use the schedules; they don‘t

prepare them,‖ Scott said.

A number of other companies

can prepare tax depreciation

schedules for investors. Scott

said CBRE had a large

residential valuation business

and could use its existing

infrastructure to offer a cost

competitive service in preparing

depreciation schedules.

The scale of its business meant it

could prepare the reports in a

Save Thousands of Dollars

Each Year in Claimable

Deprecation…

Investors are missing out on

thousands of dollars worth of tax

deductions by failing to take

advantage of depreciation

benefits, according to CBRE.

The real estate services

company last week launched a

tax depreciation service aimed at

Australian residential property

investors.

―It‘s astronomical the number of

people who are unaware of the

depreciation benefits that are

available to them,‖ said CBRE

Capital Allowances National

Director Neale Scott who leads

the division.

―Owners of new properties could

often claim 2 to 4% of the

purchase price in depreciation in

the first year of ownership,‖ Scott

said. On a newly constructed

property purchased for $400,000,

for example, the depreciation

benefit could be between $8,000

and $14,000 in the first year. But


shorter time frame than many of

its competitors. It aims to deliver

depreciation schedules to its

clients within five to 10 days.

―For every depreciation schedule

that we do, we fully inspect the

property which is also a massive

point of difference,‖ Scott said.

The service is available across all

metropolitan areas and CBRE

launched its Capital Allowances

business in Australia about 12

months ago, initially targeting

commercial and agribusiness

sectors. ―The addition of a

residential platform enables us to

offer a full suite of property and

tax depreciation services across

all sectors,‖ Scott said.

The business specialises in

f o r m u l a t i ng d e p r ec i a t i o n

schedules and prov id ing

associated advisory services,

including preparing property

re insta tement cos ts and

depreciated replacement cost

assessments.

Source: Property Observer – 22

September 2014

6 October Labor Day (Office Close) 15 October Mid Month Accounting 3 November End of Month Accounting

A Selection of Properties Recently Leased

Bellbowrie House $370 p.w.

3 bed, 2 bath, 2 car accommodation

Quote

―Man never made any material as resilient as the human spirit.‖

—Bernard Williams

Bardon House $550 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 Chris [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.

Hawthorne Unit $595 p.w.


Calendar of Events

Hi Chris, Great news. Cant thank you enough for your prompt & cheerful service. Cheers, Tony Young

Another happy customer—Wow Moment

landlords' newsletter october 2014

Documents

investment property

rental property

coownership of property

coowning property

property prices

depreciation deductions

split depreciation schedule

depreciation legislation