Real Estate – Financial Year Records
July 13, 2010 by CameronFisher · Leave a Comment
When preparing your end of year financials property managers and investors need to consider a wide variety of factors for taxation.
Most investors are likely to agree: the calibre of a property manager is often measured by their record keeping and reporting standards; at least this is true at the end of the financial year. The standard of record keeping and reporting can make or break a tax return. If the records aren’t up to scratch, then providing appropriate and correct information to the tax office can be very difficult. Changing Places prides itself on its property management expertise. To prove how good we are we offer a fixed management rate of 4.4% for the first 6 months.
Quality record management is something that needs to be ongoing; so if you find that it is not up to scratch this year, make sure the bar is reset and your portfolio is being managed appropriately in the new financial year. Record keeping for the end of financial year can be broken down into three distinct areas: income, expenses and depreciation.
Income related to the investment property is probably the simplest area to keep track because there is generally only one revenue stream for each property: rental income. A good property manager will provide a concise summary of rental payments received over the last financial year. Investors should ensure all rental payments have been accounted for and that rental income amounts correspond with bank statements.
Expenses can be somewhat more complex, as it involves a (very) wide variety of items. The list detailed within provides a solid overview of the normal expense items that should be included as part of an investment property claim. It is important to ensure all of the claimable expenses are included as part of the end of year assessment on the property in order to obtain the greatest tax benefit possible.
Depreciation refers to normal ‘wear and tear’ to the asset, capital works and other depreciable items such as fixtures, fittings and appliances. The depreciation schedule is one of the most important documents relating to an investment property. For investors it is best practice to engage a quantity surveyor before the property is leased, in order to have a complete and accurate depreciation schedule in place. If you are seeking to claim depreciation on improvements or construction work, but don’t have receipts, you will need a valuation report on the property.
Property Purchased in 09/10 Financial Year:
If the property was purchased in the latest financial year, the tax office will require details of the property including the purchase date, settlement date and purchase price. Other purchase documentation will include paperwork relating to the mortgage (borrowing and set up costs of the loan, stamp duty on the mortgage and government charges) and the date the property was made available for rent.
Keep in mind Changing Places are not taxation advisers, accountants or financial planners. We recommend you seek independent professional advice and guidance when undertaking your end of financial year activities. However Changing Places can save you substantial amounts of money with all your real estate transactions.
Go to www.changingplaces.com.au/landlords.html to find out more.
Go Figure – Making sense out of the real estate data
July 13, 2010 by CameronFisher · Leave a Comment
There has certainly been plenty of data released in the past weeks which show how the real estate market has performed over the last year and where it may be headed over the coming 12 months.
The Reserve Bank of Australia has decided to leave the cash rate unchanged at 4.5 per cent at its monetary policy meeting.
Australia’s labour market has continued to perform well as May 2010 employment data showed that the national unemployment rate dropped to 5.2 per cent from 5.4 per cent, with the participation rate falling slightly from 65.2 per cent to 65.1 per cent. Victorian unemployment increased slightly for the month to 5.4 per cent from last month’s 5.3 per cent, as the participation rate increased from 65.0 per cent to 65.2 per cent. The strong higher demand for workers in our already strong labour market could put upward pressure on interest rates in the months to come.
The Australian and Victorian housing markets have continued their strong performance this year. The Melbourne auction market had a clearance rate of 68 per cent in June and a clearance rate of 76 per cent for the calendar year so far. There have now been over 14,800 homes sold by auction, almost twice as many as last year and 11 per cent more than the previous high in 2007. June 2010 had more auctions on a winter weekend than ever before, with over 1050 properties going to auction.
The number of total dwelling units approved in Victoria decreased by 3.0 per cent in seasonally adjusted terms for the month of May 2010, following a revised decrease of 15.2 per cent in the previous month. The value of total dwelling units approved in Victoria increased by 11.7 per cent to $1.4 billion dollars. In trend terms, the number of total units approved in Victoria decreased by 2.8 per cent for the month while the value of total dwelling units approved fell by 0.8 per cent.
Housing Affordability in Victoria has decreased in the December quarter. The proportion of income required to meet monthly loan repayments has increased from 28.2 per cent to 29.5 per cent over the quarter. The average monthly home loan repayment has increased by 8.4 per cent for the quarter while the median weekly family income has increased by only 3.3 per cent. Supply issues need to be addressed as soon as possible for affordability to improve.
The total value of owner–occupied housing commitments, excluding alterations and additions, for April 2010 decreased 2.4 per cent in trend terms, which is now the tenth consecutive decrease. In seasonally adjusted terms, the total value of owner–occupied housing commitments increased by 0.6 per cent. The total value of commercial finance increased in trend terms by 5.6 per cent and increased by 2.8 per cent in seasonally adjusted terms. The value of total personal finance commitments decreased in trend terms by 0.6 per cent and decreased by 0.5 per cent in seasonally adjusted terms.
The Metropolitan Melbourne rental market eased slightly in May 2010, with a vacancy rate of 1.7 per cent up from last month’s 1.6 per cent. The inner-Melbourne rate remained unchanged at 1.6 per cent. The middle-Melbourne rate eased from 1.6 per cent to 2.0 per cent, while the outer-Melbourne rate also eased to 1.3 per cent from 1.1 per cent last month.
Most Changing places real estate agents are still experiencing strong demand from investors, as vacancy rates remain very low. And whilst the real estate sales market is weakening at the top end the middle range is still very strong. If you are considering selling you can still expect to achieve a good result and be sure to take advantage of our flat fees which could save you thousands of dollars.
Rental vacancy rate drops
May 20, 2010 by CameronFisher · Leave a Comment
Finding it hard to find a place to rent?
The REIV has released its March rental vacancy rates survey showing that vacant rental properties remain difficult to find, with a recorded vacancy rate for Melbourne of 1.5 per cent compared to 1.7 per cent in February.
REIV CEO Enzo Raimondo said that the easiest suburbs in which to find a rental home in Melbourne are within four km of the CBD, where the vacancy rate has now averaged two per cent for the first quarter of 2010.
“A vacancy rate of two per cent is well below what it should be but, in contrast to the past five years, represents an improvement.
“In other parts of the city there was unfortunately little improvement. The vacancy rate in suburbs between four and 10km from the CBD dropped from 1.4 to one per cent, which is the lowest it has been for 12 months.
“Vacancies in the middle suburbs, between 10 and 20km from the CBD, remained stable at 1.7 per cent and had eased slightly in the outer suburbs to 1.7 per cent from 1.6 per cent in February.
At Changing Places we are experiencing strong demand for rental properties and to attract more rental stock we are offering a discounted management rate to new landlords of 4.4% for the first 6 months. This allows the landlord to try out the Changing Places management team and see if we are as good as we say we are!
Go to www.changingplaces.com.au/landlords.html to find out more.
Changes to First Home Bonus in budget
May 20, 2010 by CameronFisher · Leave a Comment
As the REIV reported all is not lost for first home buyers. The strong Victorian property market and a $303M increase in stamp duty receipts has helped ensure a healthy balance sheet for the State Government in 2009-2010. However at Changing Places we believe much more can be done.
REIV CEO Enzo Raimondo said the REIV welcomes increased grants for first home buyers of a new home and calls for urgent stamp duty reform to assist home buyers paying more than their fair share in stamp duty.
“Victoria has a 22,000 shortfall of homes and the increased First Home Bonus may help increase supply.
“Increasing supply is the key to making property price growth more sustainable; however the increased Bonus for new homes does little to help the other 70 per cent of new home buyers who buy existing dwellings.
“The fact that first home buyers of a new home will now receive $20,000 in Melbourne and $26,500 in regional Victoria will help thousands of young people exit the tight rental market and buy their first home. It is however disappointing that buyers of existing homes will see the assistance provided to them drop from $9,000 to $7,000 in 1 July.
“It appears that the removal of the $2,000 First Home Bonus for existing homes pays for the $2,000 increase for new homes.
“This measure will make it harder for 70 per cent of first home buyers and easier for 30 per cent.
With six children myself, and therefore reason for added concern, I see it just getting harder and harder for first home buyers to get into the market place. There is no doubt that Governments can do more to assist, as it is their taxes and economic policies that are putting home ownership out of reach of many.
Real estate still hot
May 20, 2010 by CameronFisher · Leave a Comment
Despite interest rate rises Changing Places real estate agents remain busy with a significant increase in pre-listing activity.
This is also echoed by RP Data’s market activity index, which saw real estate activity trended upwards last month, reflecting a high level of new listings flowing onto the market week on week.
Last week recorded the third highest number of auctions held so far this year.
50,486 new property listings have entered the market over the last four weeks and there are about 209,000 properties now being advertised for sale across the country, which is about the same amount of stock in the market at this time last year.
But despite stock levels remaining fairly high, RP Data’s senior research analyst Cameron Kusher said overall stock levels are depreciating, which indicates homes are being absorbed faster than they are being added to the market.
“On the rental side, the total amount of rental properties being advertised has fallen by 4.3 per cent over the last month, a sign that rental demand is continuing to escalate,” Mr Kusher said.
So prices look certain to remain strong in the coming months and there is no doubt it is still a good time to sell, and don’t forget you can take advantage of Changing Places flat fee real estate service.
Go to www.changingplaces.com.au to find out more
Changing Places SA Has Changed Places
May 19, 2010 by MShaddick · Leave a Comment
Changing Places SA has relocated our office to the prominant position of 19 A dawson street Strathalbyn.
How to win at property auctions
September 24, 2009 by CameronFisher · Leave a Comment
How to win at property auctions
By Pam Walkley,
Money Magazine, June 2008
How do you stop yourself from paying over the odds when you are trying to buy your dream home at auction, asks Money reader Miranda.
“I recently came into an inheritance and want to use the money as a deposit to set myself up in a home I love, but everything I like goes to auction and I know nothing about auctions,” Miranda writes.
Well Miranda, it’s time to educate yourself about the auction system. And the best way to do that is to actually attend as many auctions as possible to familiarise yourself with the process.
There is also some useful information available on the web. Do a google search for “buying a home at auction” in Australia and your screen will light up. Neil Jenman’s seven rules for buying at auction (see www.jenman.com.au) is well worth reading.
One of the biggest hurdles you will need to overcome is underquoting on auction properties by real estate agents. Jenman says agents routinely underquote by about 20 percent to get people to the auction. If you fall for this ploy you could find yourself spending a lot of money on building and pest reports for properties you cannot realistically afford.
Buyers agent Patrick Bright, whose latest book is a guide to saving thousands at auction*, says he hates seeing buyers wasting money and emotional energy preparing to buy a property they have been duped into thinking is within their price range.
Auctions are all about competition and “everyone wants to be a winner”, says Bright. “Bidding frenzies occur when buyers let their hearts — or egos — rule their heads.”
And horror stories of people who later regret getting carried away at auction abound.
To play the auction game successfully you need to remember agents are likely to be underquoting by up to 20 percent. This means if they say $500,000 and you cannot afford $600,000, walk away.
Next you need to devote the time and energy to know thoroughly the market you are buying into. Bright says you really need to inspect about 100 comparable properties and carry out detailed analysis of recent sales in the immediate vicinity before you can confidently arrive at a fair value figure for your dream home, a process that will take many weeks.
If time is a problem or you want to double-check your figures, it would be worth considering hiring an experienced valuer, which will generally cost a few hundred dollars. Once you know the value you can work out your “walkaway” price which is fair value plus maybe a premium for emotional value as it’s going to be your home, Bright says. “This is your limit and if bidding goes above this figure, you’re out.” No ifs no buts.
If you do not think you can be this disciplined, get someone you trust to bid for you and do not even attend the auction.
Remember you will need to have your money lined up and any inspections carried our before the action because if you do buy under the hammer it’s unconditional – there is no cooling-off period.
Moves to stamp out dummy bidding in NSW, Victoria and Queensland have generally made the auction process more transparent. But dummy bidding, non-genuine bids meant to inflate the price, can still be carried out by vendor’s relatives or friends without the selling agent knowing warns Bright. So watch out!
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