Hi – for those following my tale..my wife and I have decided to rent our unit instead of selling at a big loss, to re-assess after 12-18 months. So, we will have our first IP!! What I want to do now is to prepare / understand everything I need to, to ensure we get off on the right foot.
I am going to get a depreciation schedule, I have an accountant etc..but what else do I need to have in place when renting out the unit? i.e insurance etc etc. We will be using an estate agent to manage the property, who charge 5% of rent + GST.
Also, is it best to wait until the new financial year to start renting, would this make it easier? BTW, our first baby is due in October..so keep that in mind too..[biggrin]
Thanks all – any suggestions welcome, I want no unkowns in the process, and no “Oh, I wish I’d have known that at the start” events..
Hi Andy,
Pleased to hear the light is a little brighter.
As for renting it – I would make it available to rent towards the end of the financial year. This will maximise your depreciation claims that available to you in the low asset pool ctaegory. Many of these will be immediately written off, or at worst, lumped at the front end thus maximising your deductions.
You will need to get landlords insurance for the property.
And finally get the move out of the way so you and your wife have time to settle into the new place and make that feel like home. Don’t leave the move to the last minute as your wife will probably somewhat tired closer to end of term.
Derek
[email protected]
http://www.pis.theinvestorsclub.com.au
0409 882 958
Skype – derekjones2113Insurance on the property, not the contents as they are not yours (unless you are renting it furnished).
CATA
Asset Protection Specialist
[email protected]Hi – I have the standard building insurance, which is included in the strata fees – do I need landlords insurance on top of that?
Derek – thanks for the advice re depreciation etc…I’m sure it makes sense to an accountant..
As we have been in the unit for approximately 6 months, do we claim 50% of the year 1 depreciation, even if it is rented out only for e.g. 1 month of the financial year (if we get someone in for e.g. start of june 06)??Hi Andy,
You will need Landlords Insurance on top of building insurance (make sure you include landlord’s contents and public indemnity coverage in your policy)
Landlords insurance will typically cover you for malicious damage, break lease and untenantable property due to repairs. Note accidental damage (spilled red wine on the carpet) is not normally included as standard fare in landlords insurance policy. If you want to include this you will need to specific additional coverage.
Your strata insurance will cover damage to buildings but it does not cover damage or loss to your contents – eg window treatments, carpets etc. As such you do need to include this type of cover in your policy.
Do not short change on public indemnity insurance. You may get a tenant who wants to take you to the cleaners because you floor tiles in the bathroom are slippery, or the carpet on your stair well is tatty and so on.
As for the depreciation bit – I am not 100% on this so I will defer to a learned accountant. However as I understand it your depreciation schedule will calculated as from the day the unit becomes available for rent.
Note I said available for rent. The ATO does allow you to make claims if your unit is available for rent – there is no requirement for it to have a tenant in it. In effect if you moved out and it took a week to find a tenant then all costs incurred in that week are still deductible.
Derek
[email protected]
http://www.pis.theinvestorsclub.com.au
0409 882 958
Skype – derekjones2113
As we have been in the unit for approximately 6 months, do we claim 50% of the year 1 depreciation, even if it is rented out only for e.g. 1 month of the financial year (if we get someone in for e.g. start of june 06)??You must be logged in to reply to this topic. If you don't have an account, you can register here.
