» Property Investing

PropCalc: The investment property calculator for all investors

BMT team — Tue, 22 Nov 2022 05:11:31 +0000

The first step towards owning an investment property is making sure you’re in the financial position to do so. The costs associated with purchasing and maintaining an investment property aren’t always clear nor is the potential cash flow outcome. BMT Tax Depreciation’s investment property calculator PropCalc was developed to eliminate the guesswork from property investment. PropCalc estimates the likely costs of owning any investment property and models your cash flow, even before a purchase is made. In this article we will explore: What PropCalc does How PropCalc How investors can benefit from PropCalc What PropCalc does PropCalc can help both prospective and existing residential property investors estimate the cash flow position of any investment property. The calculator estimates the after-tax holding costs and property’s gearing level based on the investor’s financial scenario. PropCalc takes property related tax deductions into consideration and allows investors to compare multiple properties side-by-side to see which would be best suited for their financial situation. Users can access PropCalc through MyBMT, a portal for property management featuring schedules and policies, record keeping, PropCalc and a research and insights portal which displays planning applications and census data, providing a better indication of future capital growth and vacancy rates. How PropCalc works PropCalc uses property-specific data to give a realistic impression of cash flow by calculating the difference between rental income and expenses, including tax deductions available for expenses. Simply enter the address of the property and PropCalc will pre-fill with reliable estimated data which can then be adjusted for various scenarios. The calculator will include deposit, mortgage insurance, stamp duty, legal fees, interest, body corporate fees, insurance, council rates, water rates, property management fees, repairs and maintenance estimates and depreciation. Once the information is filled out a report will be displayed with property images and estimated figures including holding costs, gearing level and rental yield. You can also see the holding costs in a weekly, fortnightly, monthly or yearly period. Once the report is complete you can go back and change any figures if the scenario changes. PropCalc generates property reports, allowing you to save and compare multiple properties online and through the app. How can investors benefit from PropCalc? PropCalc gives users the advantage of knowing their likely out of pocket cash flow position prior to purchase. This information can help them explore property buying options and make informed decisions on whether a property is suitable without any costs or commitment. PropCalc is available as an app so that properties can be compared on-the-go at property inspections. After inspecting the property, users can add images and enter in notes to have them included in the report. Or the report can be downloaded as a PDF and taken when inspecting the property. Over 40,000 people are already enjoying the benefits of PropCalc. Join them by adding this to your investment property tool kit. Download the app on Google Play, or the App Store or visit bmtqs.com.au/propcalc today.

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Reap rewards when investing in commercial real estate

BMT team — Mon, 25 Jul 2022 23:33:12 +0000

NAB’s latest Australian commercial property survey revealed that recovery from the pandemic downturn is slowly entering commercial property market sentiment. It also reported that 57 per cent of developers plan to start new projects in the next six months. If activity like this is sparking your interest in getting started in commercial real estate investing, here is what you need to know. In this article, we will cover: Why and how to get started Tip 1 – define commercial investment strategy Tip 2 – research Tip 3 – finding the property and tenants Tip 4 – claiming depreciation early Why get started? You need to start somewhere but it’s the motivation, strategy and lateral thinking that will make the difference to how successful your investment portfolio will be. Commercial real estate investing is a great way to diversify your portfolio. When done right, it will result in high returns and reliable tenant leases that lasts years or even decades. How to get started in commercial real estate investing Here are our four key steps to getting started in commercial real estate investing. It may not always be a linear process but covering these will ensure you have set yourself up for success when it comes time to invest. 1. Define commercial investment strategy This is where it’s important to ask yourself all the usual questions: Why do you want to invest in commercial property? What type of commercial property – is there a specific or multiple industries you want to invest in? You also need to adopt big-picture thinking and understand your long-term strategy even in the early stages. Many commercial industries are affected by consumer demands, so you need to invest in property that will be able to ride through the ups and downs of the changing economy. Essential services industries are a great example of this – despite the downturn of COVID-19 they still needed to operate, whether it be in a different format. 2. Do the research By research we don’t simply mean looking through sale listings to find the best deal. So many more factors go into the research process when buying commercial property. Look into all data available for the commercial market as a whole and the specific industry you want to invest in. Research what the industries outlook is and if this is favourable to your investment strategy. Government resources such as the Australian Bureau of Statistics can provide information on business count rates, and the annual percentage change in businesses by industry. While real estate research from credible sources such as JLL and CBRE provide many different reports and outlooks on industry-specific markets. External factors also need to be considered. What are the population and employment trends in the area? Is the commercial industry at risk of becoming irrelevant as the economy develops? Then, start assessing how the investment will impact your cash flow, ask yourself if you can afford this for the long term. Assess your financial position and ensure you look at all financing options available. 3. Finding the property and tenants The overarching strategy, your market research and financial position will inform what property you purchase. Once you’ve done this it’s time to look for tenants. You might get lucky and land a commercial property with favourable tenants already occupying it. This is not unusual, as commercial leases often run for a longer term than their residential counterparts. You can read more about buying commercial property with existing tenants here. If the property is vacant at the time of purchase, it’s time to start looking for tenants. A property management agency that specialises in commercial real estate can help you find the best match. It’s important to remember that sometimes this process can take longer than expected due to the nature of commercial tenancies. 4. Get a depreciation schedule early Depreciation is the natural wear and tear of property and assets. All property investors – both residential and commercial – can claim depreciation as a tax deduction each financial year. This deduction will help you pay less tax. Depreciation is deducted from your income each financial year, just like any other tax deduction. But the difference with depreciation is that you don’t need to spend money to claim it. This makes it the perfect helping hand when you are getting started in commercial property investing. BMT Tax Depreciation has helped tens of thousands of commercial investors claim a life-changing amount of depreciation deductions. We apply all relevant legislative requirements to every tax depreciation schedule we prepare to ensure claims are compliant and maximised. This is essential as there are sector-specific taxation rules across commercial industries – assets in one industry may not depreciate in the same way in another. If you’re considering an investment but have not yet purchased it, you can get an over-the-phone free depreciation estimate from BMT. This will show you just how much of a difference depreciation can make. To learn more, contact BMT on 1300 728 726 or Request a Quote.

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Discover the different ways to invest in property

BMT team — Sun, 30 May 2021 23:43:14 +0000

New ways to invest in property continually emerge. Nowadays, you can even invest in property with as little as $50. In this article, we will cover the following ways to invest in property: Fractional investing Real Estate Investment Trusts Purchasing and renting a property out Rentvesting Turning your home into an investment How to invest in property To invest in property you need a strategy, the finances and the knowledge of what you want to invest in – especially now that there are so many different property investment options available. Fractional investing Fractional investing is a relatively new way to invest in property that allows you to invest with as little as $50. Fractional investing involves purchasing a fractional ‘share’ of a physical property through a trading platform like BrickX or Bricklet. This share, also known as a ‘bricklet’, can be purchased for as little as $50. Example: A $500,000 property is broken into 25 bricklets, valued at $20,000 each. Each bricklet entitles the owner to 1/25th ownership of the property. Bricklets work in the same way as other tradable shares, in that they can be bought and sold on a trading platform. The way you earn a return or dividend is through the net rental income from the fraction of the property you own. Further returns can also be generated if the property’s value increases through capital growth when it comes to selling your share in it. Another method of fractional investing is through The DomaCom Fund. This is a regulated and ASX listed company which is a managed investment fund. It allows investors to select the properties they are wanting exposure to and via crowdfunding, the investors commit towards the eventual purchase of the property. When the crowdfunding campaign is complete, The DomaCom Fund purchases the property, places it in a sub-fund and issues the investors involved with ‘units’ in the property that are proportioned to the amount they invested. Each investors return is based on the percentage of the unit they own. The units are liquid, so investors involved can sell their units to other investors. Real Estate Investment Trusts (REITs) Investing in a REIT is another way to get exposure to the property market without buying a physical property. A REIT is like a managed fund, in that it is professionally managed and pools investors’ money together to invest in a diverse portfolio, often made up of commercial properties such as office towers, shopping centres and healthcare facilities. When you invest in a REIT you are issued securities, which act like shares. The securities are publicly traded on the Australian Stock Exchange and pay a regular income in the form of a distribution. Like shares, they also have the opportunity for capital gains and can be sold anytime. The minimum amount you need to invest in a REIT is generally $500. Purchasing a residential or commercial property to rent out to tenants This is the age-old way to invest – seek out a suitable property that has the core purpose of being an investment. Investment properties come in all shapes and sizes. On the residential side you have houses, units, townhouses, duplexes and studios. In the commercial space you have a range of different properties across commercial industries such as offices, warehouses, retail stores and hospitality venues. Rentvesting Rentvesting involves purchasing a property and leasing it to tenants, while you rent somewhere else – usually in a more desirable suburb. While it may seem counterintuitive, rentvesting is a good way to get a foot in the door of property investing. It allows you to purchase somewhere that you can afford, while living somewhere that suits your lifestyle. Turning your home into an investment There are several reasons why you might turn your home into an investment property. Maybe you’re relocating, downsizing or upsizing and wanting to hold onto your property until selling conditions improve. Or it may simply have been your plan all along. Whichever the case, turning your home into an investment is a genuine way to invest in property. An added bonus is that many of your previous home-ownership losses would now become tax deductible – like interest repayments, insurance, repairs, water charges and council rates. Claim everything you’re entitled to Successful investors maximise returns by claiming all permitted tax deductions. When purchasing an investment, make sure you get a depreciation estimate early. This could help you claim back thousands of dollars in just the first year of ownership. BMT Tax Depreciation provide obligation-free depreciation quotes across the country. Over the past twenty years, BMT has prepared more than 700,000 tax depreciation schedules, so you will have peace of mind knowing your depreciation needs are being looked after by the experts. To learn more about depreciation, contact BMT on 1300 728 726 or Request a Quote.

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How much money can you really make from property investment?

BMT team — Tue, 23 Mar 2021 21:49:57 +0000

As property prices and rental rates rise across Australia, investors are holding onto their properties to take advantage of positive rental returns and strong capital growth. But this raises the question – how much money can you make from property investment? The upfront costs of purchasing a property and the ongoing costs can go into the tens of thousands, the important thing is keeping track how much you really make each year. In this article, we will cover: How you make money from property investment Factors that impact how much you can make The bottom line Firstly, how do you create wealth from property investment? Investment property owners can create a return from rental income and capital growth. Your rental income is the rent a tenant pays to live in your investment property. If the rental income is more than the expenses, the property is positively geared and is surplus to any ordinary income you may earn elsewhere. Improving the property will enhance the amount of rental income you will make now and over time. For example, doing some basic landscaping and a paint freshen-up could achieve an extra $25 per week or $1,300 per annum. Capital growth is the increase in the property’s value. It is usually the result of strong demand for the property you hold. Historically in Australia, all areas grow in value over the long term. A capital gain is made when a property is sold for more than its purchase cost. For example, if an investor purchased a house for $500,000 in a postcode that experienced 30 per cent growth over the 5 years that they owned the property, it’d be worth $650,000. How claiming expenses creates wealth Claiming tax deductible expenses means you will pay less tax on your income, so you have more money back in your pocket. Tax deductible investment property expenses include: Interest repayments Insurances Property management fees Repairs and maintenance Body corporate fees and strata charges Property taxes Council rates Property management fees Advertising fees Some legal expenses Property depreciation. So, how much can you make from property investment? Unfortunately, it’s not a straightforward answer. Many contributing factors impact how much you can make from property investment. Just some are: Property type and location The type of property you own and where it’s located will influence rental yield and the capital growth. A unit and a house in the same location are unlikely to attract the same rental rate. And you wouldn’t expect to charge the same amount of rent for a 3-bedroom house in metropolitan areas as you would in a regional town. Property prices don’t increase at the same rate across the country. Some areas could be booming, while others are decreasing. The capital growth (or even loss) outcome can change quite significantly based on the location and property type. The market Rental rates, competition and vacancy rates in a local market can drive the return from your investment property up or down. So, it literally pays to do your research before buying. Look at other, similar properties in the same area – what are their rental rates and how much are they selling for? Does history show rising or falling property prices? Factors such as these will inform how much money you will make from an investment property purchase. Utilising hidden tax deductions As a property investor, you have access to more tax deductions. We covered many of these earlier, but it’s important to use all tax deductions at your disposal – even ones that are hard to find, such as depreciation. Depreciation is the natural wear and tear of a property and its assets over time. The bonus to this deduction is that you don’t need to spend any money to claim it. It’s one of the highest deductions available to investors, coming second only to costly interest repayments. You can claim depreciation on the structure of the building like the walls, doors, roof and stairs. Depreciation is also available on any eligible assets like hot water systems, light fixtures, kitchen appliances and window coverings. This lucrative deduction proves well worthwhile, with the average first full year deductions found by BMT coming to almost $9,000. The bottom line – do your research and crunch some numbers beforehand So, what does this all mean? Essentially, you need to do the research and leg work to know how much money you will make from property investment. Doing so will give you an idea of the rental return you will make and the capital growth potential of the property. Your cash flow isn’t going to be the same as the next investor, so you need to thoroughly understand the role the investment will play in your cash flow. BMT Tax Depreciation offer many free tools and apps to help you do the research and get to the answer. PropCalc is a great example, as this shows the real cost of owning a property and the impact it will have on your cash flow (positive or negative). The research and insights feature on MyBMT can also be a helpful tool when doing the background research on a property and area. To learn more, contact the team on 1300 728 726 or Request a Quote.

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Foreign investment in Australian property: how it works and how to reap the benefits

BMT team — Sun, 14 Mar 2021 22:29:37 +0000

Foreign investment is an important part of the Australian economy and helps it reach its full economic potential. For example, foreign investment in Australian increases tax revenues of the federal and state governments that can be used to fund parts of the community like hospitals, school and other essential services. Beyond the economic factors, foreign investment enriches the Australian climate with diversification, increased competition and performance. If you’re a foreign resident to Australia, and thinking about investing in residential property here, this is what you need to know and how you can claim tax deductions like depreciation. In this article, we will cover: What is foreign property investment Rules and regulations Foreign investment and depreciation What is it and how does it work? If you’re a foreign person to Australia (including temporary resident or foreign non-resident), you can directly invest in Australian property. However, there are several rules and regulations that apply to you and the type of property you can invest in. Here is a short overview of some of the key rules that apply. FIRB consultation Before deciding whether to invest in Australian property, it’s important to read through the Foreign Investment Review Board (FIRB) guidance notes. These outline what is required, processes, what you can and cannot invest in and any additional fees you may be subjected to. Property type The types of Australian properties that you can invest in include: New dwellings Established dwellings to live in (i.e. as a main residence, not investment) Properties for redevelopment Off-the-plan properties Vacant residential land This means you will generally be prohibited from purchasing established property, like a second-hand house, as an investment. But you can apply for what is called an ‘exemption certificate’. If you’re successful in your application, the exemption certificate will allow you to purchase one unspecified residential property (i.e. one excluded from the list above) in a particular state/territory without having to apply for approval. Taxation requirements Once you own an Australian property, you will be subjected to Australian taxation requirements. This means you will need to get a tax file number and report all rental income and expenses by lodging an Australian tax return. Through this tax lodgement process, you may be required to pay a vacancy fee. This fee was introduced in 2017 and is an annual fee that must be paid if the property isn’t residentially occupied or leased for more than six months (183 days) in a year. As a foreign investor, can you claim tax deductions and depreciation? Claiming tax deductions comes hand-in-hand with reporting taxable income in Australia. This means you can claim deductions when lodging their Australian tax return. Just some of the deductions you can claim are expenses for are interest repayments, insurances, property management fees and much more. A tax depreciation schedule prepared by a specialist quantity surveyor will also allow you to claim depreciation on the property. Depreciation is the natural wear and tear of the property and its assets over time. You don’t need to spend any money to claim depreciation and it has the potential to boost cash returns by thousands. Case study – claiming depreciation in practice Nina is a permanent resident of Beijing, China. She purchased two Australian investment properties at the start of the 2020-21 FY. The table below provides information on each of her new residential investment properties and the first-year depreciation deductions she could claim from each. When combined, Nina’s annual taxable income from the properties is $67,600 and total first-year depreciation deductions come to $32,622. The table below demonstrates how depreciation alone affects the amount of tax she needs to pay. By claiming depreciation alone, Nina has a tax liability of $10,602 when lodging her Australian tax return. Without depreciation, she would’ve been faced with a tax liability of $21,970 (assuming a 32.5 per cent tax rate) – therefore making an annual saving of $11,368, or approximately $219 per week. BMT Tax Depreciation specialise in comprehensive tax depreciation schedules for both Australian and non-Australian residents. To learn more about claiming depreciation, contact BMT Tax Depreciation on 1300 728 726 or Request a Quote.

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How does owning an investment property affect your taxes?

BMT team — Tue, 24 Nov 2020 22:43:39 +0000

Does owning an investment property affect your taxes? It certainly does. The income generated from the property is included in your taxable income on top of other income sources, such as your salary. But owning an investment property doesn’t necessarily mean paying more tax. In fact, it can also lead to you paying less tax while building capital. In this article we will explore: Rental property income Rental property expenses Property depreciation – the deduction without an expense What gearing is best for you? Rental property income The rental income you receive from your investment property is included in your annual taxable income. Given that property is usually a stable, long-term investment, it’s easy to estimate the income stream it provides. Residential leases often run for 6 to 12 months and the national vacancy rate is currently stable at 2.1 per cent. This means on average, properties only sit vacant for one week a year. Rental property expenses Claiming expenses goes hand-in-hand with reporting the income you receive. Most costs associated with owning and operating the rental property can be claimed in the financial year the expense was made. Some of the top rental property expenses include interest repayments, depreciation, insurances, council rates and charges, property management fees and more. The only types of expense you can’t claim are capital expenses. These are the foundational costs of owning the investment property such as the cost of land, building and pest inspections prior to the exchange of contract and stamp duty. These are assessed when calculating the cost base to work out capital gains tax (CGT) when the property is sold. Sometimes the rental property expenses can be more than your income, especially in the earlier years of ownership. When this occurs, it means your property is ‘negatively geared’ as it’s making an overall loss. The loss from your investment property can be used to reduce other assessable taxable income like your salary, meaning you pay less tax. Property depreciation – the deduction without an expense Property depreciation is one of the most beneficial deductions you can take advantage of. It’s the second-highest deduction available to property investors, after costly interest repayments. Not only can you claim it for up to forty years, but an added bonus is that you don’t need spend any money to claim it. This is because depreciation is the natural wear and tear of a property and its assets over time. This depreciation is treated like other expenses and is deducted from your taxable income each year. What gearing is best for you? There is no ‘right’ answer to this question. It depends on your own investment strategy. Most Australians have debt associated to their property and are therefore running at a loss. This allows them to take advantage of negative gearing. Property investors sometimes intentionally negatively gear their property. They do this to reduce their taxable income as their property grows in value. While self-funded retirees may have a different strategy, aiming for positively geared property, as their investments are their main source of income. Having a trusted investment property team around you will help you establish a solid strategy, making your rental property income work for you. For over twenty years, BMT Tax Depreciation has helped over 700,000 investors claim property depreciation and boost their cash flows. To learn more about depreciation and the services that BMT offers, Request a Quote or call 1300 728 726. Related topics: Is stamp duty tax deductible? Are refinance costs tax deductible on a rental property? Top rental property tax deductions How does investment property depreciation work?

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Understand Airbnb income tax requirements and deductions to get the best return

BMT team — Mon, 03 Feb 2020 00:37:27 +0000

Millions of travellers use Airbnb every year. However, many hosts fail to take full advantage of the depreciation deductions available on their Airbnb investment. By tracking expenses and claiming depreciation, you will make sure your Airbnb is as profitable as it can be. In this article we will explore: What is Airbnb? Advantages of Airbnb hosting Disadvantages of Airbnb hosting Do you have to pay taxes on Airbnb income? Scenarios of claiming depreciation on an Airbnb investment Sole Airbnb Part Airbnb What is Airbnb? From city apartments to luxury camping, Airbnb provides unique short-term accommodation for travellers and an easy way for hosts to make extra income. The share economy is booming in Australia with Airbnb fast becoming a fierce competitor to the hotel industry. Advantages of Airbnb hosting Providing a flexible option for investors, Airbnb allows hosts to control pricing and timeframes throughout the year. Unlike long-term rentals, you can take advantage of peak holiday times by adjusting the rental prices charged. Disadvantages of Airbnb hosting A hotel and an Airbnb operate very similarly, with a high turnover of guests in short periods. Managing the upkeep and cleaning demand of your Airbnb is key to its success. High guest volumes also increase the chance of property damage. Having the right insurance, clear property rules and a security deposit are just some ways of making sure you’re covered for any unexpected surprises. Do you have to pay taxes on Airbnb income? An Airbnb falls under the same tax reporting requirements as any income-producing investment property. When you rent out part or all your property as an Airbnb, you: need to keep records of all income earned and declare it in your income tax return to the Australian Taxation Office by the required deadlines don’t need to pay GST on amounts of residential rent you earn need to keep records of expenses you can claim as deductions. When you sell your investment property, you need to pay Capital Gains Tax (CGT) on the profit made from the sale. Your main residence is generally exempt from CGT. However, if you decide to rent out part of your home as an Airbnb, you’re no longer eligible for the full CGT exemption. This is due to the home being part income producing, CGT is then applied on a percentage basis, commonly based on floor area. Scenarios of claiming depreciation on an Airbnb investment Claiming depreciation on any Airbnb property will make it more profitable. Methods of calculating tax deprecation deductions are significantly different between a sole Airbnb and part Airbnb property. Sole Airbnb You can claim full depreciation deductions on a sole Airbnb for the period it was genuinely available for rent. If you decide to use your own Airbnb for a holiday, can you still claim depreciation? If you stay in your Airbnb for any period, all tax depreciation deductions must be distributed to the time the property was only used for income-producing purposes. Part Airbnb If you only renting out part of your home as an Airbnb, your home becomes a part private and part income-producing dwelling. Many hosts are unaware that they can still claim depreciation on their part Airbnb on a pro-rata basis. The pro-rata calculation is usually based on floor area. You’re also able to claim depreciation for the plant and equipment dedicated to the investment side of the property. It’s important to know that if you decided to rent out part of your main residence as an Airbnb after 1 July 2017, you’re not able to claim depreciation for pre-existing plant and equipment assets. For assets purchased directly for the Airbnb, such as the bedroom furniture, you can benefit from the full tax deduction benefits for the asset’s effective life. Shared area assets, such as kitchen appliances, are only partially deductible and must be apportioned appropriately. To find out more about how depreciation deductions can maximise the return on your Airbnb investment, request a quote or contact the specialist BMT Team on 1300 728 726

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How to become a property investor while earning less than $80k per year

BMT team — Thu, 19 Sep 2019 06:10:25 +0000

You don’t have to be a high-income earner to purchase an investment property while living in Sydney or Melbourne. There’s a simple solution for those earning less than $80,000 per year who are struggling to get on the property ladder – rentvesting. How to become a property investor by rentvesting Rentvesting involves purchasing a property in an affordable suburb whilst continuing to rent in an area suited to your lifestyle. It’s a great way to get into the property market sooner, particularly if buying a home in the area you live is currently out of reach. By buying an investment property, rather than a home, you can build a property portfolio which can later be used as leverage to help afford a home, or even additional investment properties down the track. For many on a moderate income, buying a property in Sydney or Melbourne has been unachievable in recent years. According to the latest CoreLogic data, the median dwelling value in Sydney and Melbourne is $720,072 and $626,703 respectively. While these figures may be out of reach for those earning under $80,000, there is ample opportunity outside the metropolitan areas for savvy rentvestors. Regional vs Metro Current BMT Tax Depreciation data indicates the majority of Australians don’t look outside their local areas when it comes to buying an investment property, significantly limiting their investment opportunities. FY 2018/19 data shows that 92 per cent of those who live in metro properties only purchased an investment property locally, compared to just 8 per cent who invested regionally. Regional investors are far more likely to invest elsewhere, with 64 per cent owning a property locally and 36 owning an investment property in metro areas. While the stats show some investors are limiting where they buy, those who earn a moderate income should be encouraged by the fact that they fall within the majority when it comes to the average Australian property investor. The latest data from the Australian Taxation Office for the FY 2016/17 found 64 per cent of people who own an investment property have an income under $80,000. For those who do make their way onto the property ladder there are lucrative tax advantages. Owners of income producing properties are eligible to claim expenses relating to holding a property such as property management fees, council rates, insurance, repairs and maintenance and interest on their loan. They’re also eligible to claim depreciation deductions for the wear and tear that occurs to the building. By taking advantage of the depreciation deductions available, investors reduce their holding costs and can even achieve positive cash flow. BMT Tax Depreciation has worked with more than half a million property investors to help uncover tax deductions for the wear, tear and ageing of their investment properties. To learn more about the benefits of claiming depreciation, simply Request A Quote or call the expert team on 1300 728 726.

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Steps to expand your property portfolio

BMT team — Thu, 12 Sep 2019 01:25:22 +0000

Deciding to invest in property is one of the most significant decisions a person can make. Once on the property ladder, it can be argued that it’s just as important to consider when, where and how to expand your property portfolio to avoid risk and broaden the opportunity for success. If you’re considering this, below are some simple steps to be aware of. Do your research on the property market Whether you’re looking to buy your first investment property or expand your portfolio, it’s important to do your research. Consider economic factors and capital growth potential in up-and-coming areas with lower entry costs and forecasting high growth. Look at Development Applications (DAs) to determine any roads and infrastructure projects including new schools, commercial developments, parks and any Council re-zoning submissions as these are likely to attract renters to the area. BMT Tax Depreciation’s online portal MyBMT has a handy ‘Research and insights’ tool allowing you to view planning applications in suburbs where you may want to invest. It’s important to also consider locations with a range of public transport options, nearby employment opportunities for tenants and assess rental yields and vacancy rates. Awareness of these factors can help determine future property income potential to cover expenses involved in purchasing and holding the property. Explore additional factors that may influence your buying decision including your budget, return on investment expectations, type of loan you qualify for and depreciation deductions you may be entitled to. Within MyBMT, take advantage of PropCalc which can help you calculate the cash flow of owning any property. In its projection of future potential cash flow, PropCalc will consider potential depreciation deductions once a property is income producing to help you make an informed decision. Determine your acceptable risk What level of risk are you willing to accept? All property investment comes with financial risk and knowing your limits can go a long way towards alleviating potential stress and ensuring you don’t over-extend your financial obligations. Consider potential changes in economic factors, including interest rates, or any repairs and maintenance that may be required on the property. This will ensure you aren’t leaving yourself without a buffer if unforeseen circumstances emerge. Choose diverse locations and property options If you’re an investor wanting to minimise risk, consider diversifying your property portfolio to expand your reach and spread the financial risks across a broader range of assets. During FY 2018/19, BMT found 74 per cent of investors purchased an investment property within metropolitan areas/capital cities compared to 26 per cent who own regional investment properties. BMT found most investors prefer to stay within their comfort zone, with 92 per cent of those living in metropolitan areas also purchasing an investment property locally, compared to 8 per cent who invested in regional areas. In contrast, regional investors are more likely to invest further afield, with 64 per cent of those living in regional areas purchasing an investment property elsewhere, as 36 per cent then invested in metropolitan areas. One way investors can diversify is by selecting properties in several locations. For example, you might already own a property in Perth where property values fell by -2.1 per cent in the three months to June 2019 according to CoreLogic. If your only property was in Perth and you sold it during this time, you’re likely to have made a loss. However, by investing in other locations that are performing better and achieving capital growth, you can create a financial buffer and reduce your risk. Alternatively, another way to diversify is to consider broadening the types of properties you invest in. Most property investors tend to focus on residential rental properties, however commercial properties are also worth considering as they offer a number of benefits, as explained in our article ‘Why you should invest in commercial property’. Investors owning both residential and commercial properties minimise their risk of a single economic factor or downturn in one area of the property market affecting their entire portfolio. However, some consider commercial properties to carry greater risk due to fluctuating economic factors and possible lengthy vacancy rates between tenancies. Consult a specialist Quantity Surveyor when expanding your property portfolio Once a purchase has been made and you’ve exchanged contracts on a second property, consult a specialist Quantity Surveyor to obtain a comprehensive tax depreciation schedule for the property. BMT staff can assist you over the phone or alternatively you can request a new schedule at bmtqs.com.au or via online portal MyBMT. This online portal makes managing all your property investment and depreciation needs for multiple properties easy as all information is contained within the one handy location. Register for MyBMT today or alternatively Request a Quote online or speak with one of our expert team on 1300 728 726.

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Australian smoke alarms regulations and rules for landlords

BMT team — Fri, 23 Aug 2019 00:20:36 +0000

Smoke alarm rules vary across Australia, but generally they must meet Australian Standards. Below is a summary of the regulations in your state. It’s recommended to refer to your relevant state authority for specific legislative requirements. Contents Queensland New South Wales Victoria Tasmania South Australia Western Australia Northern Territory Australian Capital Territory Why comply? Depreciation deductions for smoke alarms Queensland New smoke alarm legislation states all Queensland residences must be fitted with interconnected photoelectric smoke alarms. They must comply with Australian Standard (AS) 3786-2014 and are required in all new dwellings and substantially renovated dwellings (this applies to building applications submitted from 1 January 2017). To ensure you remain compliant, and for more information visit New Queensland smoke alarm legislation. New South Wales In New South Wales, smoke alarm compliance is regulated by the Environmental Planning and Assessment Amendment (Smoke Alarms) Regulation 2006 and the Residential Tenancies Act 2010. Smoke alarms installed after 1st May 2006 must comply with Australian Standards AS3786. There must be at least one working smoke alarm installed on every level of a home or residential building where people sleep. This includes rental properties, relocatable homes, caravans and campervans. Fire and Rescue New South Wales recommends additional precautions be undertaken, including placing interconnected smoke alarms in all bedrooms, living areas, hallways, stairways and also within the garages of homes. Landlords are responsible for replacing wireless smoke alarms with new batteries at the start of a tenancy. Once the tenancy has begun, the tenant then becomes responsible for replacing the battery, as required. In addition, landlords are also responsible for replacing hard-wired smoke alarm back-up batteries. Victoria All homes, units, flats and townhouses constructed after 1st August 1997 require smoke alarms that must comply with Australian standards AS3786 and are interconnected to 240-volt mains power. Additionally, a backup battery must also be installed within the smoke alarm itself. Homes constructed after 1 May 2014, which have undergone any major renovations require more than one interconnected smoke alarm installed. Tasmania From 1st May 2016, all rental property smoke alarms must be mains powered or have a ten year non-removable lithium battery. The device must meet the Australian Standard AS 3786 – 2014 or AS 1670.1 – 2015. Tenants must test each smoke alarm and notify the owner or property agent if it’s not working. Landlords must ensure smoke alarms are compliant with regulations and repair or replace the smoke alarm or battery as soon as possible, if notified by tenants of any issues. They must clean, test and ensure all alarms are working correctly prior to leasing a property. Alarms should also be replaced every ten years. South Australia Homes or residential rental properties purchased prior to 1st February 1998, must have a replaceable battery powered smoke alarm installed to comply with legislation. Homes or residential rental properties purchased on or after to 1st February 1998 must comply with Regulation 76B of the Development Regulations 2008 and smoke alarm(s) must be installed within six months from the day of title transfer. They must be a 240 volt, mains-powered smoke alarm or contain a 10-year life tamper proof battery, permanently connected. Homes or residential rental properties built on or after 1 January 1995 must comply with The Building Code of Australia, requiring a 240 volt, mains powered smoke alarm be installed. For any new residences, additions or extensions to existing properties require interconnected smoke alarms be installed and both homeowners and residential landlords are responsible for ensuring compliant working smoke alarms are installed. Western Australia Western Australia’s Building Regulations 2012 requires homeowners to comply with Building Code of Australia (BCA) guidelines on the placement and installation of smoke alarms. From 1st May 2017 all newly installed smoke alarms must now comply with AS3786:2014. Regulations require that smoke alarms for homes newly built after 1st May 2015, must be interconnected to power mains. For those intending to sell or lease their property, smoke alarms should also have been installed less than ten years prior and must be in good working order. Northern Territory Legislation requires hard-wired photoelectric smoke alarms or those with sealed battery units containing a ten year life lithium battery be installed in all residential properties and movable dwellings, including caravans. Any hardwired smoke alarms must be installed by licensed electricians, but battery-powered smoke alarms can be installed by anyone following manufacturer instructions. Property owners are required to test each smoke alarm at least once per year. Where impractical for an owner or investor to personally maintain, test or replace alarms, they can nominate a proxy, such as a property manager to act on their behalf. Tenants are obligated to test each smoke alarm at least once per year and notify the owner or property agent of any smoke alarm issues. Australian Capital Territory The ACT residential Tenancies Act was amended on 24th August 2017. Existing rental property owners have until 24th August 2018 to ensure their smoke alarms comply with the legislation. Property owners must install working smoke alarms that comply with Australian Standard AS3786(1) and with the Building Code of Australia. Working smoke alarms must be installed on each level of the property and with one located in each space between bedrooms. Homes constructed after 1994 must have at least 240 Volt hard-wired smoke alarms. Homes constructed prior to 1994 can have 9 Volt battery-operated smoke alarms. Tenants are required to test and replace smoke alarm batteries as required. Why comply? Ensuring your property and the tenants are protected is paramount. Complying with the rules and regulations surrounding the type and installation of smoke alarms will also ensure you can continue to lease and/or sell your investment property and avoid non-compliance penalties. Depreciation deductions for smoke alarms You can benefit financially from the legislative changes for smoke alarms. Residential property smoke detectors are considered a plant and equipment asset and can be depreciated at a rate of 10 per cent per year over a maximum twenty year effective life. If the smoke alarm costs less than $300, these […]

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