As with personal new year resolutions at the beginning of the calendar year, the best Financial Year resolutions are those that are achievable and actionable. July is the optimal time to assess your financial foundation and create goals and resolutions for the coming year.
Here are some tips and tricks to help you design your optimal and make the best out of your investment:
1. Fixed Tenancy Agreements
We are recommending that all our clients secure their tenants with a fixed term lease where possible. This is due to not only the uncertainty of the current economy but also because most landlord insurance policies are most effective with a fixed lease in place.
However, if you’ve already got a good tenant paying fair rent and the prospect of fixing the lease spooks them, then it’s probably not worth pushing too hard for.
2. Landlord Insurance
We cannot stress enough the importance of having landlord insurance!
A landlord’s insurance in general covers you for tenant-related risks including loss of rental income, and loss or damage by tenants to your building and contents.
They only cost about $300-$500 per annum and not having landlord insurance is like driving a car daily without insurance!
Details and level of cover varies for each insurance provider. We have a few favourites we like to work with, let us know if you need a recommendation.
3. Tax tip: Depreciation reports are worth their weight in GOLD
A tax depreciation schedule is an ATO complying document that helps property investors unlock the tax deductions available to them.
A schedule captures the wear and tear of a property over time. The ATO classifies this wear and tear as an expense to investors which can be claimed as a tax deduction.
We have found that even some really seasoned investors can overlook depreciation reports and miss out on tens of thousands of dollars worth of deduction.
Anything built after 1987, is worth having a depreciation schedule for.
Not all accountants would recommend you to get a depreciation schedule so the onus is on you to reach out to a quantity surveyor and weigh your cost vs benefit.
We recommend using Duotax, if you quote that you were sent from Metro realty they will look after you for approx $495 for a residential property (RRP $700). You’re welcome!
4. Tax tip: COVID-19 Land Tax relief
If you’re a commercial or residential landlord who has reduced your tenants’ rent due to COVID-19, you may be eligible for the NSW Government’s land tax relief.
Please see Service NSW website for more information
5. Study your annual statement
Study your annual statements, where is your money going? If that dishwasher cost $300 to repair, next time it gives you an issue it’s worth replacing altogether, for example.
This financial year has been quite rocky since COVID so we wouldn’t say this would be a regular financial year. However expenditure-wise a general rule of thumb is:
- Expect large capital improvements every 7-8 years: new flooring, paint, blinds and appliances and fixtures such as light fittings
- Account for 2 weeks of rent per annum on vacancy and or equivalent money spent on small repairs
- If your property was for lease in the period since March 2020 your vacancy may have been much more than your regular 2 weeks. Average days on market for June 2020 was 28 days
PS: We never charge our owners for annual statements. One of the many perks of being a Metro client!
6. Updated appraisal
An updated appraisal may allow you to pursue other financial interests, sell (either downsize or upsize) or ensure that your property is adequately insured.If you want to know the NEW value of your property please get in touch with