So, you have just bought an investment property and ‘hot tips’ are coming from everywhere. Don’t get overwhelmed, start with the basics.
Here are four fundamentals to help set you up for success.
1. Get the property rent-ready
Getting a property ‘rent-ready’ means some repairs and maintenance may be needed to make sure the property is fit for tenants.
This could include ensuring all smoke alarms meet government standards, checking for leaks in the property’s plumbing and reviewing the state of the property’s fittings and fixtures like floor coverings and guttering. Maintenance activities such as pest control, professional cleaning and yard maintenance may also be required.
Look into your state or territory’s rental standards to ensure your property meets all legal requirements. You will be able to find those that are relevant to you on your state or territory’s government website.
2. Find a suitable property manager
Your property manager is the go-to person that makes managing your investment property easy, so it goes without saying that finding a suitable one should be at the top of your priority list.
Property managers do a lot of heavy lifting to ensure you find a reliable tenant that will treat your property like their own. Not only do they collect your rent, but they also manage inspections, tenant communication, maintenance or repair requests and help you through the process of any disputes that arise.
Take the time to research local property managers. See what they specialise in and the extent of their experience. It’s always a good idea to meet your property manager in person and discuss your needs prior to signing any contacts.
3. Talk to your accountant
An investment property provides a new income stream, and it’s important to manage this effectively.
Your accountant will help you navigate this transition. They will help you budget, plan and manage your cash flow. They will explain your taxation reporting obligations. They will know the ins and outs of repairs versus maintenance and will also ensure you claim every tax deduction possible so your investment’s cash flow will reach its full potential, including depreciation.
4. Find out if depreciation is available
Depreciation is the natural wear and tear of property and assets over time. As a property investor, you can claim this as a tax deduction. In further good news – it’s the second highest tax deduction after investment loan interest repayments and you don’t need to spend any money to claim it.
Depreciation is claimed using two categories – capital works and plant and equipment.
The first, capital works, is claimed on the building’s structure and fixed assets. This usually makes up 85 to 90 per cent of a depreciation claim. The second category of plant and equipment is claimed on the easily removable and mechanical assets.
Don’t make the mistake of dismissing depreciation if you have purchased a second-hand property. While you can’t claim the second-hand plant assets, these properties can still hold thousands of depreciation deductions in the form of capital works and new plant assets.
Find out just how much depreciation you can claim from your recently purchased investment property with an obligation-free depreciation estimate from BMT. The team do the work to ensure they achieve the highest deductions available from your investment.
To learn more about depreciation, contact BMT on 1300 728 726 or Request a Quote.