A LANDLORD’S GUIDE TO THE EOFY
With the End of Financial Year (EOFY) fast approaching it is a good time to review whether you are doing all you can to be tax-compliant but also whether there are any opportunities to increase investment property returns. While many of us don’t particularly enjoy tax time and look to outsource everything we can to an accountant, taking a proactive approach to your rental’s financials can make a big difference to your tax return.
Check out our tips below to help you to ensure you’re getting the most from your investment.
Invest in a depreciation schedule!
Many landlords avoid learning about depreciation and their investment property however, investing in a depreciation schedule is an absolute no brainer. Depreciation is a key element of your investment property strategy. While depreciation tax breaks are higher on newer properties, they’re also available for older/existing properties.
As a property investor, you’re able to deduct the cost of the depreciation of your rental from your overall taxable income, incredibly, around 80% of investors don’t claim the depreciation of their investment property at tax time – which is crazy when it’s so simple to arrange and annual deductions are typically in the thousands of dollars every year, for up to 40 years. If you don’t have one for your rental property, contact your property manager today and we can assist.
Invest in your investment… you heard me!
Savvy landlords understand that having an investment property isn’t a set-and-forget proposition. Investing in your investment property goes beyond addressing repairs and maintenance issues, it means identifying improvements that will appeal to a broad range of potential tenants, increase the weekly rent, and improve the overall value of your property. If you’re willing to invest but not sure how to maximise your “bang for buck”, our experienced property managers will be able to identify aspects of your property ripe for improvement, offering your asset wider tenant appeal and the potential to yield higher rental returns.
Review your rental property’s insurance
EOFY is a sensible time to review both your personal insurance and the insurance you hold for your investment property. The right insurance for your rental will depend on a number of factors, including whether your property is a standalone home or part of an owner’s corporation. If you’re part of an owner’s corporation, they’ll generally arrange for insurance to cover the building and common property – but you’ll need to take out your own insurance policy for items like floor coverings, appliances, window coverings, etc. When comparing insurers ensure you compare what the policy does and does not cover, a small saving now could cost you further down the road. Speak to your property manager to confirm your best approach regarding insurance.
Make sure your accountant knows property!
Property investment is a niche accounting category, and in order for you as a landlord to enjoy all the benefits investment offers, you need an accountant who knows how to treat your asset as a business! It’s in your interest to work with an accountant well-versed in the opportunities and risks that concern a property investor’s return. Your accountant should work with you to maximise the benefits you receive from your investment property. If they’re simply inputting the figures you provide regarding income and expenses, it could be time to look for a new provider. From both a compliance and financial perspective, a clued-up property expert accountant will help you get the most out of your investment property.
Please note that we have now closed out the 2022/2023 financial year and you should receive your EOFY Statement within the next week or so.
Our move to a cloud-based solution is underway! Your July 2023 statement will look and feel a little different, but should you have any questions please call our team.
Owner and Tenant Portals are coming and will be rolled out in the back part of 2023. Landlord and tenant portals are an online platform where owners and tenants can log in to access their property information and communicate with the team.
By providing access, our clients and customers can instantly see their status such as property maintenance, arrears, leases and management information, as well as documentation!
HOUSING BILL VOTE DELAYED DESPITE HOUSING ADVOCATES’ PLEAS
Australia’s housing and homelessness organisations united to urge the passage of key housing legislation.
The bodies — which included Community Housing, Northern Aboriginal & Torres Strait Islander Health Alliance, Homelessness Australia, Property Council of Australia, Industry Super, Everybody’s Home, and National Shelter — took the cause to Canberra on Monday, 19 June, where they were joined by Senator David Pocock and Senator Tammy Tyrrell in pushing Parliament to act on housing legislation before the winter break on Thursday.
Despite the united front, the Greens and the Coalition successfully kicked the vote until October.
The bills in question are the Housing Australia Future Fund Bill 2023, the National Housing Supply and Affordability Council Bill 2023, and the Treasury Laws Amendment (Housing Measures No. 1) Bill 2023. Voting on these pieces of legislation has so far been stalled by the Coalition, who raised concerns about the impact on inflation, and the Greens, who had been calling for additional funding for social and affordable housing as well as a rent freeze.
In a statement, the social housing and homelessness advocates said they felt parliamentarians had “strengthened [the] three pieces of legislation aimed at addressing Australia’s deep and considerable housing challenge” and called for the legislation to proceed without further delay.
The bills, they argued, will “go further and do more for Australians in need, thanks to amendments that guarantee annual dispersal of at least $500 million per year for the construction of social and affordable housing”.
With winter setting in across the country, they stressed that “time is now of the essence”.
“The Parliament rises for the winter break this Thursday and will not resume until August. Australia cannot afford to delay its response to the housing crisis any longer,” they said before that eventuality came to pass.
Addressing the challenges facing Australians who are trying to find or keep their current housing arrangements, the bodies noted that rents have soared up to 22.8 per cent in Sydney, 21 per cent in Melbourne, 15.5 per cent in Brisbane, 12 per cent in Adelaide, and 18.9 per cent in Perth.
Furthermore, they cited figures from UNSW City Futures Research Centre that found 640,000 Australians are in housing stress, with the number projected to hit 1 million by 2041 on the current trajectory.
“This is the worst housing crisis in living memory,” the bodies said.
“The new institutions [this legislation] will create, such as Housing Australia and the Housing Supply Affordability Council, need to start their important work. We need a robust national response that has a significant expansion of social and affordable housing as its central pillar. We also need better planning systems for our cities and the roll out of annual state housing targets for social, affordable and at-market housing through the national housing accord,” they argued.
Ultimately, however, the housing advocates conceded that the new laws were not perfect, but they stressed that they had reached a consensus that it was better to move forward with the current proposals than to return to the drawing board.
“As advocates, we intend to build upon the new legislation by campaigning for additional resources in the years ahead. We know that the current legislation on its own will not fix the housing crisis. But it does create the institutions necessary to make a start. We consider this package a floor, not a ceiling.
“This is especially true for Aboriginal and Torres Strait Islander communities, whose housing needs have been consistently neglected, leading to severe overcrowding and poor health,” they noted.
SA GOVT SCRAPS STAMP DUTY TO OPEN HOME OWNERSHIP DOOR
The Malinauskas government has utilised its 2023–24 state budget to abolish stamp duty for first home buyers purchasing under certain conditions.
Under the new scheme, first home buyers who purchase a new home valued up to $650,000, or vacant land valued up to $400,000 to build a new home, will be free from paying the controversial stamp duty tax.
According to state Premier Peter Malinauskas, the program will remove nearly $50,000 from the cost of an average new home, a financial factor he believes will make home ownership easier and cheaper for first home buyers.
“Importantly, this will also help stimulate new supply in the market, helping ease the housing crisis for everyone, and providing a pipeline of work for an important sector of our economy,” he added.
Earlier this year, NSW’s newly elected Minns government pushed forward with their election promise to remove the controversial tax for first home buyers purchasing a home valued up to $800,000.
More recently, the Queensland government were criticised by the Real Estate Institute of Queensland (REIQ) for failing to explore similar stamp duty abolishing schemes in its state budget for next financial year.
South Australian Treasurer Stephen Mullighan said removing stamp duty at a time when first home ownership feels increasingly out of reach for first home buyers in the state will “keep dreams of home ownership alive”.
Data from the Real Estate Institute of South Australia (REISA) found the state’s median house price recently leapt above $600,000, a new record for the state.
Despite the state’s median house price matching the threshold for the stamp duty abolishment scheme, Nick Champion, the state’s minister for trade and investment, insisted “this landmark package opens the door for first home buyers and renters”.
In addition to the state’s stamp duty scheme, the South Australian budget revealed an increase to the First Home Owner Grants (FHOG) property value cap from $575,000 to $650,000.
The FHOG is a scheme available to eligible first home buyers who build or buy a new home. The government believes increasing the value cap by $75,000 aligns the scheme better with the state’s rising home values.
According to a media statement from the South Australian government, these schemes combined “mean eligible first home buyers who build or buy a new home valued up to $650,000 will now receive up to almost $30,000 in stamp duty relief as well as a FHOG payment of $15,000, bringing total relief from the state government to $44,580”.
While it is estimated the programs will cost around $147.3 million over four years, the government declared they would benefit nearly 4,000 first home buyers per annum.
Stamp duty relief comes as part of the South Australian government’s $474.4 million housing package which aims to deliver 3,600 new homes over five years and reduce the cost of housing for around 14,000 new homes.
The government’s housing package includes:
– Building an additional 564 public homes and stopping the sale of 580 others
– Fast tracking the single largest release of residential land in the state’s history – totalling more than 25,000
– 700 additional affordable homes under the National Housing Accord
– Delivering targeted reforms to rental laws including banning rent bidding
Thank you for your ongoing support!
Regards David, Benjamin & the Team at DB Philpott Real Estate