My wife and i have decided to rent our unti out in june the query i have is,
do i need to goto to the accountant from day 1 or do i leave it until we get our taxes done
and just keep all the reciepts to give to them at tax time as it is our first rental to kick our portfolio of the ground we are very unsure.
Being our first rental we will be going through a real estate agent to manage the property we are just unsure
on how we go about it when it comes to the tax side of thing and we will take any advice on board
thankyou for taking the time to help us we really appreciate it thanks.Kev,
You really only need to see the accountant when you have your tax done, unless you have any other queries at the time of renting it out, like If you are unsure of what information you need to keep etc.
Go to your accountant at tax time with a good summary of the expenses, plus your agent's statements. If you have a good summary, it will save the accountant time, and you money!
Make sure you have adequate insurance like a landlords insurance
If you owned the property as your main residence and you plan on getting another place as your main residence then a valuation may be required to create a cost base for your investment property for capital gains calculations in the future.Kev2008,
Probably the most important thing to keep in mind when renting out your place is to ensure the loan principal owing on your investment poperty (i'm assuming you've got a geared IP) is and continues to remain as 100% investment related.
In other words, ensure the purpose of the original loan drawdown and subsequent redraws/drawdowns are for investment purposes only and not tainted with private purpose (such as drawing money out to pay for holidays). It will save you a lot of accounting fees to keep your IP loan "clean".
I've seen really mucked up LOC that people use for both IP and private purposes.
A home loan that features an offset account is preferable to a LOC or redraw facility, in this regard.
Edvico
I am about to consolidate my original home loan with some other debts, but in the near future am thinking of renting out my home.
Will the new loan be classed as 100% investment related then, or will having consolidated the other loans cause issues at tax time??
Thanks.
T.Dolphn Girl,
Depends on what the purpose of the other debts are for. Investment debts or Private use debt.
(there has to be a direct nexus between the loan and the income producing purpose- tax law wording in ITAA1936)Nexus means connection or tie
Section 8-1 Tax assessment Act 1997
http://law.ato.gov.au/atolaw/view.htm?locid=%27PAC/19970038/8-1%27#8-1
Investment debts or Private use debt.If the other debts are private use then your consolidated loan is not going to be 100% investment related.
And will be difficult to determine how much of the interest is for investment and how much is for private at future tax time when you decide to rent it out.
If the other debt is private use a seperate line of credit loan would isolate the private use debt from the investment debt
just do not mix private use with investment use.
Some banks allow multiple line of credit loans secured against the house so you can have a line of credit set up for personal use that is non tax deductible and then have another line of credit loan for some kind of investment purpose if the need arose.
My bank allows 5 line of credit accounts
At the variable house interest rate.Keep the record of the rentals you recieve and at the end of the financial year you can provide him the record and avail tax benifits for you.
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