Tenancy Agreement - To Fix or Not to Fix? Security is the long standing argument for having a fixed term tenancy agreement in place but there is more at risk for owners than just the rent coming in. In this issue of Espresso we look at the three most important points to consider when setting tenancy terms.Start and end dates Conversely, Christmas is the worst time of the year for the property to become vacant as a majority of the market will be on holidays or not in a financial position to make a change. If the lease ends at this time you could be exposed to uncomfortable periods of vacancy. The solution is to end a fixed term tenancy agreement in late January so if the tenant does vacate the property, the market is in your favour. Remember, fixed term tenancy agreements do not have to be six or twelve months, they can start and end when it suits the owner. Validity of insurance Increased rental yields Sure you can increase the rent on a periodic lease but when will you remember to do this again? At least the fixed term keeps you to a schedule for the investment. I know what you are thinking - a fixed term tenancy might still make it hard to increase the rent bu the opposite itrue. A smart negotiation includes a rent increase at a pre-determined date during hte fixed term. The tenant still needs written notice, however the legislation does allow for an increase, as long as it is written into the terms of the lease at the commencement of the tenancy agreement. If your property is a weath tool yet your tenants ar enot currently on a fixed termlease, perhaps now isthe time to ask whether a periodic tenancy is really in your best interests for growth. Water Charging Recently we have received quite a few enquiries regarding charging tenants for water usage. Please ensure that you forward a copy of the relevant bill (making sure that you check the dates carefully) to our office so that we can arrange to recoup the money from your tenants. Eco Tip When was the last time you checked your property for energy effeciency. Did you know that energy effecient light globes last 6 times longer than the old incandescent blubs. Savingyour money and the environment. Investment Property for Sale We are very proud to present our feature investment property for sale. This property is currently under our managment and we can provide you with all the tenancy details. Please contact our sales team if you would like further information regarding this or any other property. Depreciation Schedules Depreciation is sadly often missed by investors, but it is a legitimate tax deduction. The tax office admits that 52% of investors don’t claim what they are legally entitled to. Don’t let it happen to you! There is no cash outlay required to legitimately claim a tax deduction, and you can claim depreciation even if you are making a profit after expenses from your investment. Most properties have a combined depreciation allowance as a tax deduction between $3000 and $25,000. If your tax rate is 46.5%, the ATO will refund you between $1,400 and $12,000 even if the property is cash flow positive. To find out if you how much depreciation you are allowed to claim, employ a licensed quantity surveyor, and they will create a depreciation schedule. This will map out what you are entitled to claim. Your depreciation schedule will need to be updated for all improvements & renovations to the property. Why Do I need A Tax Depreciation Schedule? A tax depreciation schedule reduces your tax liability on assessable income. The tax depreciation schedule allows you to claim back money that would otherwise go to the tax man. What is a Tax Depreciaion Schedule? A tax depreciation schedule reduces your tax liability on assessable income, it allows you to claim back money that you otherwise be paid in tax. A tax depreciation schedule is a report which outlines the depreciation allowances that an investor is entitled to. There are two types of deduction. The capital works deduction and plant and equipment allowances. A capital works deduction applies to the building and any structural improvements. Depending on the date of construction, the rate applied is either 2.5% or 4.0%. The second deduction is the plant and equipment allowances. Certain items of plant and equipment can be depreciated at an accelerated rate. For example carpet, air conditioning, curtains, and appliances. How Much Depreciation can I Claim? The amount of depreciation you can claim will depend on the type of property you own and the fixtures, fittings, furniture and plant and equipment. Owners of apartments & townhouses can claim a portion of the common property areas within their complex. What happens if I have owned my property for a long period of time? Tax depreciation schedules can generally be backdated for a period of up to 5 financial years providing you have owned it for that length of time. Can I use the sample estimate that was given to me by a developer in my tax return? A sample estimate is generally used as a marketing tool to show what an investor might expect to be able to claim if the property was purchased. Often the sample estimate isn’t specific to your property and may not contain or include all depreciable items that would be found if a full depreciation schedule was completed. You may end up under or over-estimating the amount of depreciation that you are legally allowed to claim. How can I increase my Tax Deduction in the first year? If you are looking to maximise your tax deductions on your new investment properties, and believe a renovation will add capital value and a better rental income. Be aware that any improvements you add will not be tax deductible. However, all fixtures and fittings that are pulled out and thrown away can be written off, as long as they are depreciable and have some value in your depreciation schedule. If your depreciation schedule says these items still have value then:
Remember, you can claim renovation works on your property even if you didn’t do the work yourself. So if the previous owners put a new roof on your property, this would appear in your depreciation schedule. The following examples are common depreciable items that can be found in a standard residental property, along with their effective lives. Remember that all properties need a depreciation schedule. Please contact our office if you would like us to organise a schedule on your behalf today.
August Rental Market Review With the school holidays over and everyone back to work, it seems that the amount of enquiries has tripled. The start of the month was slow (we think due to the holidays and the election announcement) however the end of the month was amazing with huge amounts of enquiry and properies being let left rightand centre. APM economist Matthew Bell predicted in February 2010 Perth median house rents could climb 11 per cent this year, in line with the average growth rate of 12.4 per cent experienced since 2003, while Brisbane rents should lift by about 8 per cent. Tracie Harrington Principal/Director of Harringtons Property Management said "it looks like this prediction will come true". Tracie also said "Even though the market has been tough over the last year nearly all new tenancy agreements have had rental increases negotiated and written into them. This allows our clients and customers to enjoy the benefit of a fixed term tenancy and a rent increase whilst minimising the risk of vacancy." Interview with an Investor Name: Mark Occupation Field: Law Claim to fame: I am best remembered in my home town for a catch I took during a local cricket match – they says it’s the best catch ever taken by a square leg umpire! The things I love about investing are: Discovery each year (around tax time) that our investment is creeping ever closer to being positively geared, al the while knowing that the property is increasing in value. I chose Harringtons Property Management because: When my wife and I purchased our investment unit the outgoing owner recommended Harringtons. We went with that recommendation and we are so glad that we did. If I could have a super power what would it be i.e. strength, invisibility and why: The power of infinite patience – I have 3 children, who wouldn’t want that. My future property goals are: Invest to a level that I am comfortable with. Property investment is great, but I don’t want to lose sleep over my level of debt. My hobby is: Writing children’s books (hopefully, soon to be published) and learning electric guitar. If I could invite any 5 people to dinner they would be: Sir Richard Branson (what an interesting man); Julia Gillard and Kevin Rudd (I’m not a Labor party man, but that would be a fun combination); Humphrey B. Bear (he doesn’t say much and he can keep the children entertained while the grown up’s talk / watch the fight between Kev and Jules); and, James Earl Jones (I would like him to record a message on my telephone answering machine). My funny family photo:  |
Featured Rental Properties  LABRADOR $330pw This great one level unit in small quiet complex comprises of lounge & dining area, separate kitchen, separate laundry, huge rear deck (perfect for lazy weekends), 2 great sized bedrooms, wooden flooring, timber venetian blinds, air-conditioning, family bathroom with separate shower, toilet and single lock up garage. Please contact our office immediately to organise a viewing of this superb unit - make an appointment now
 Belmont $2100pw Harringtons Executive Division are proud to present this exclusive family home which has to be viewed to be appreciated for its space and practicality. The special features include: Air Conditioning system throughout to offer maximum comfort, Alarm system with intercom, large executive chef kitchen, rumpus/games room with large bar with fireplace, informal living room, separate dining, stunning 2 storey Florida room at the rear overlooking the gorgeous resort styled landscaped gardens and in-ground pool. Large bedrooms (with built ins) and WIRs, the master suite is extra large with walk in and tea making facilities, stunning ensuite (the size of your average bedroom) with spa bath. A combination of wooden flooring and carpeting throughout, laundry room, 4 car lock up garage, underground concealed Water Tank, tennis court, paved garden areas, fully fenced, 5 mins to Gateway or Gold coast motorway. Make an appointment now.
 MORNINGSIDE $630pw Harringtons Property Management Executive Division is proud to present this large 2 storey, 4 bedroom (or 3 + study as the 4th bedroom is fully wired for internet usage) in a quiet location. Take advantage of this home's huge rear deck which overlooks the landscaped low maintenance gardens (don't worry we are supplying the gardener - you have better things to do with your time). This home features a designer kitchen with stainless steel appliances (smeg) including dishwasher overlooking the large lounge and dining areas. It also boasts internal laundry, family bathroom, en-suite, BIRS, air-conditioned and polished foors. Downstairs features 2 car lock up remote controlled garage, workshop, huge storage area, covered entertaining with built in seating and BBQ area (perfect for watching the kids on their bikes). The home will be fully fenced so you can leave the kids play unsupervised. The home also boasts garden shed and space for a boat/trailer. Make an appointment now.
 MORNINGSIDE $380pw We are very pleased to present the chic 2 bedroom apartment located on a short distance from Oxford Street, City Cat, cinemas, parks, schools and transport. This apartment features secure entrance, open plan lounge, dining, kitchen area opening onto the large private covered entertaining area. This home also features air-conditioning, en-suite and bathroom, secure parking, internal laundry and stainless steel appliances in the kitchen. Contact us to make an appointment now.
 MORNINGSIDE $460pw Harringtons Property Management are very pleased to present this lovely renovated 3 bedrooms (PLEASE NOTE THAT ONE OF THE BEDROOMS IS ACCESSED FROM THE DECK SO IT MIGHT SUIT STORAGE OR A HOME OFFICE) highset home located close to Tafe, trains, buses and local schools. This home features front facing deck with sliding doors leading to the lounge room. The large kitchen is large enough to place a dining table and it leads out to the rear facing deck which overlooks the lush rear garden and in-ground pool. Please note that the main bathroom has a shower only (NO BATH). The pool features a pool cover and the owners will pay for its maintenance (please note that all pool chemicals used will be charged to the tenants). Contact us to arrange a viewing time today...we will organise appointment that suits your schedule.
 BULIMBA $450pw Harringtons Property Management are very proud to present this highset Queenslander replica situated in beautiful Bulimba. Only a short walk to Oxford Street, the Apollo Street City Cat and bus stops. This home is fully fenced and comprises of stairs to the front deck, large open plan lounge and diningflowing to the open plan kitchen. This home also boasts a 3 bedrooms, BIRs, main bathroom (with shower only), rear facing deck, low maintenance gardens, laudnry downstairs in the large lock up garage with HUGE storage space. Pets are negotaiable. Contact our office now! 
Recommended Contractors If you are anticipating carrying out any maintenance in any Brisbane property, please contact our office first. Harringtons Property Management will shortly be incorporating a property maintenance company to carry out our repair work. As we deal in bulk we can obtain discounted rates. So whether you are looking for pest control, depreciation, carpenter...et al please contact us first.
A Message from Tracie We are constantly striving to improve the services we provide you. If you think that we can be doing something better then please contact me direct. We have been very busy since we opened our sales division. We are now doing regular sales appraisals for our clients. If you are thinking of selling your property (whether it be your own current home or your investment property) then please contact us for a free sales appraisal (day or night). I would like to say a special thank you to those who participated in the parenting survey. Your answers were very useful and will assist with Justin to complete his PhD Whilst on the subject of families, as you probably know by now we support ACT for Kids (formerly the Abused Child Trust). You may have seen their advertisements on Channel 7 or in the Courier-Mail recently. We are very proud to announce that we are now an official Bronze Sponsor of ACT for Kids. www.actforkids.com.au Child Protection Week (2/9/10) will bring the focus of children welfare to the forefront of the community, please visit the event calendar to see if you can support this fantastic charity in some way. I emplore you to support this fantastic cause. |
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