What are sundry rental expenses?

BMT team — Tue, 03 Nov 2020 22:01:41 +0000

Successful property investors claim every deduction they are entitled to. From large deductions like property depreciation and interest repayments, to the smaller ones such as stationary costs and sundry expenses. Rental property expenses can stack up quickly. Claiming these correctly can often make or break your success as a property investor. Contents What is a sundry rental expense? Do investors take advantage of sundry rental expenses? What happens when a sundry expense becomes more frequent? Tracking sundry rental expenses is easy with MyBMT Claim the most with a tax depreciation schedule Key points A sundry expense is rare in nature and of low cost. They may be small, but latest statistics revealed investors claimed over $1.6 million in sundry expenses during FY 2017-18. An expense can be taken out of the sundry category if it becomes more frequent and expensive. What is a sundry rental expense? A sundry rental expense can be various things, from interest on loans used to buy depreciating assets, bookkeeping fees and bank charges. In the accounting landscape, sundry rental expenses are defined as ‘rare’ and in small amounts. This means a large, frequent expense such as mortgage interest repayments can’t be recorded as a sundry expense. There are a wide range of sundry expenses available for you to claim. The exact types or categories can change based on your circumstances. Do investors take advantage of sundry rental expenses? While sundry rental expenses can be made up of several smaller costs, the numbers prove that investors still take advantage of them. The latest statistics released by the Australian Taxation Office (ATO) from FY 2017-18 revealed that sundry rental expenses made up over $1.6 million of claims made by Australian investors. What happens when a sundry expense becomes more frequent? Everyone’s investment property journey is different, and sometimes an expense that was originally classed as sundry may eventually need to be reported as its own category. In practice: sundry to regular expense Henry and Val own a block of fifteen residential apartments and rent each out. The apartment block is located in a popular coastal holiday destination. Henry and Val hire security to monitor the outside of the building on known busy nights such as New Year’s Eve and national public holidays. As this is only a few nights of the year they can claim the security cost as a sundry expense. After the first year of this arrangement, they decided to make the outside security monitoring more regular to include school holiday periods and all public holidays. As the expense becomes higher and more frequent, Henry and Val aren’t able to claim it as a sundry expense. Instead, the security cost will become its own category in their tax return. Tracking sundry rental expenses is easy with MyBMT Knowing what you can claim is just one step to making the most out of your investment property. Tracking and lodging these expenses correctly is just as important. The income and expenses tool on the free MyBMT portal helps you do this easily and will save you time. The tool tracks expenses with just a click of the button so there’s no need to keep piles of paperwork and receipts in your desk drawer. MyBMT’s income and expenses tool is also designed to easily integrate with the ATO’s MyTax portal and any accounting software. Claim the most with a tax depreciation schedule A tax depreciation schedule fee is a one-off, 100% tax deductible sundry expense. BMT is the leading specialist and provides the most comprehensive tax depreciation schedules on the market. BMT guarantees to find double their fee in the first full financial year claim or there will be no charge for their service, so you always know the schedule is worthwhile. To learn more about BMT and the BMT Tax Depreciation Schedule, Request a Quote or call BMT on 1300 728 726.

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Investor story: Quantity surveyor and tax depreciation specialist Bradley Beer

Bradley Beer — Fri, 11 Jul 2014 06:00:45 +0000

BMT’s Managing Director, Bradley Beer recently sat down with Property Observer author Jessie Richardson to discuss the lessons he’s learned over the past thirteen years as a property investor. Throughout this interesting insight into his strategy Brad details some of the trials and tribulations he’s faced as a property investor including some invaluable tips for new investors. Below is the full transcript of his interview. THE BEGINNING I bought the first property in 2001. It was an old, very rough, four bedroom house in the Newcastle area, with a big shed out the back, which I still own. Then I went straight into a serious amount of renovation. I’ve done a number of renovations over the years, and that was the first one. I was up at whatever hour of the night, after work, whenever possible on the weekends. It was pretty ugly to start with. I did that on the first one, and I did that on the second one. Then I bought some land. At that time in my life I didn’t have much equity. So I bought, I renovated, I revalued. I pulled the equity back out so I could go again. There was a lot of buying and renovating; manufacturing more equity out of the properties by going, “This is a two bedder but I can do this, this and this to make it a three bedder”. The fact is I just didn’t have equity at the time; I didn’t have any money. Hindsight is a wonderful eye-opener, and one thing I might have done differently was to use Lenders Mortgage Insurance on my first property instead of saving 20%, allowing me to buy two properties at the same time. It would have been beneficial in this instance as there was a lot of growth in the New South Wales market in those first couple of years, and in hindsight I realised I missed a chunk of it because I was trying to do things the “right way”. But you learn from these things. On any renovation you budget a certain amount to do works, and even as a Quantity Surveyor, you live in a dream land. There have been mistakes along the way, but did I make any major mistakes and completely ruin anything? The answer’s “no”. Did I find bigger problems than I expected once I pulled the walls off? Yes. You’ve just got to allow for those sorts of things. There are properties I own now that I wouldn’t have bought if I had my time again. That’s because I know more about investing properties now than I did back then. I bought land at a time when I shouldn’t have. We had the GFC a couple of years later, around the time that I settled. It wasn’t the right time in my portfolio to buy land, based on the cash flow (or lack thereof) it was going to generate. I was speculating and purchased the property on its growth potential, and I had to settle when the GFC hit, which I was financially able to do at the time, but it did tie up equity in something I shouldn’t have bought. Fundamentally, a lot of things I believe about investment haven’t changed. I would probably buy a lot of similar properties to what I have bought, even though hindsight can change things considerably, of course. I don’t have the physical time or the want to go and renovate at the moment, especially not personally. So that changes the cost of things considerably. My position is more comfortable now from an equity perspective and from an available cash perspective. The fact is, one of the keys to investing in property is learning to manage financing properly and having control of cash. I have control of more cash now through my property investing. RENOVATION: A CASE STUDY Property in Newcastle area Purchased in 2006 for $262,500 Two bedrooms One bathroom Spent $25,000 on renovations Bank valuation after renovations $360,000 Rent after renovations $310 per week Current rent $430 per week Current valuation $460,000 I’m not a “put it all on everything” kind of guy. I haven’t really got any properties in mining towns. There’s a risk associated with that. I have the kind of portfolio where I could take some risk now, but I’ve just been too busy to find one. And I think properties in mining towns should not be an early part of your investing, they should be part of your portfolio when you have the ability to take some risk. They certainly have risk attached, but then they have high returns attached as well. You need to learn a lot of things about investing in property before you invest in property. You need to learn how to structure your finance in a way which provides flexibility with cash, as well as control of your own journey or property investing “destiny”. One of my main mistakes was not investing in property earlier, based on my risk profile at the time, due to lack of knowledge. It’s all about gaining as much knowledge as possible as early as possible, learning how to manage financing, understanding what type of property, based on your risk profile, you should be buying and also what you can reasonably afford. I also did a bit of research into property markets, tax and that sort of thing during my university studies. So I understood that is a part of it too. I learned by hanging around the property industry, going to property events to talk about depreciation, reading books and actually learning about the fundamentals. I’ve continued to do that over time. LONG-TERM INVESTMENT Unfortunately Australia, like any other country, can sometimes assume a herd mentality – especially with property investment. Buying in areas that have hot growth but which lack fundamental reasons for that growth to continue is not something that you should do. But we do it in Australia. It’s why we have cycles in property […]

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What are sundry rental expenses?

Investor story: Quantity surveyor and tax depreciation specialist Bradley Beer