Skip to content Skip to main navigation

Business

The voice of business in Canberra

Renting out an investment property

By luther_bendross - 18 September 2012 27

I realise this has been touched on in the past, however I didn’t find a lot of the answers I was looking for, so here we are again.

For reasons inconsequential, Mrs Bendross and I will be leaving our house and sticking it on the rental market. For more reasons inconsequential, we will be going through an agent and not doing it privately. So I look to the hivemind for advice.

– What are typical charges? The average is 1 weeks’ rent up-front, $130 to advertise on a bunch of sites incl. Allhomes and 8.5-8.8%.

– Do you allow pets? As renters we had two dogs in tow most of the time and we’ve had them in this house. I’d like to keep the karma flowing, but karma can blow me if their German Shepherd is gonna ruin my house.

– Any agents to aim at or steer clear of? We’re in the deep, dark south so anything north of the lake seems fruitless.

– Specialist property managers vs garden-variety real estate agents?

– Anything else to look out for?

Thanks for your assistance.

What’s Your opinion?


Post a comment
Please login to post your comments, or connect with
27 Responses to
Renting out an investment property
allyroger 12:55 pm 19 Sep 12

Serious question, if the value of your IP goes down during the “Capital Gain” period – can you claim a deduction?

madscientist 6:38 pm 18 Sep 12

As a tenant we’ve had some pretty shabby property managers. Most of the time it’s just the junior in the office, who hasn’t progressed on to sales yet, and they clearly can’t be bothered with it and just want to get into selling houses.

But, in my current house, we have some fantastic real estate agents – small agency,John & Jane Whiting at Blandfordia R/E. There are three people in the firm and they really keep on top of everything – regular inspections where they diligently follow up on any items needing attention and are pleasant and easy to deal with.

I don’t know what they’re like on the other end of the equation (as a landlord), but they definitely make sure the property is well looked after, so I’d guess as a landlord that’s what you want!

Can’t recommend them highly enough –

http://www.blandfordia.com.au/PropertyManagement.htm

troll-sniffer 5:55 pm 18 Sep 12

Very Busy said :

Don’t forget about your statutory obligations. You will need to advise the Commissioner for ACT Revenue about the change in use of the property. The property will be subject to Land Tax when it becomes available for rent.
If the property is mortgaged, you should also notify your lender to remain within the terms of your loan. A higher interest rate will probably apply.
It would probably be worth getting a valuation done now because any capital growth that occurs while it is an investment property will be subject to Capital Gains Tax when the property is sold or is no longer an investment property. This can get tricky so if you haven’t already done so, you should do some research with the ATO to satisfy yourself that you know how this works.

Not quite. You’re entitled to have one principal place of residence CGT free at any one time. Even if it’s rented out it can still qualify as your PPOR. The idea is you cannot have more than one, so if you own another property as well, one of them MUST be subject to CGT.

poppy 5:37 pm 18 Sep 12

RE pets you should always advise tenants that pets will be considered on application. Once you get the tenants application and have some idea of their rental history and the age etc of the pet, you can make the final decision. If the tenant has rented for the past three years with their dog with no issues, then it is unlikely to be a problem for you. If you say no pets, then some tenants will just lie and bring the pet anyway so encourage honesty.

devils_advocate 3:56 pm 18 Sep 12

GBT said :

Unless you have a strange loan it shouldn’t matter whether it’s your PPOR or an IP. People switch back and forth all the time without notifying their banks. You certainly shouldn’t have to pay a higher interest rate.

I got a lower interest rate for my IPs relative to the house I live in, it’s called some “professional package” loan or something, comes with free offset as well, so maybe check with your bank as to whether you actually pay less for having it as an IP.

sophiekt 12:49 pm 18 Sep 12

I’ve mentioned them before but Peter Blackshaw Woden are
Great. Fees are pretty standard but excellent service and advice and they have been around a long time. Personally I would be careful with cut price / new Agencies – that is how Live In started out and look at the outcome. Speak to Maria, she is very professional and experienced – you get what you pay for.

mmillercfp 12:32 pm 18 Sep 12

You will find some of the information on capital gains tax and your main residence at the ATO website here: http://www.ato.gov.au/individuals/content.aspx?doc=/content/36887.htm.

Worth a read if you’ve not come across the provisions before. If in doubt your accountant should be very familiar with the applicable rules.

GBT 12:27 pm 18 Sep 12

Very Busy said :

Don’t forget about your statutory obligations. You will need to advise the Commissioner for ACT Revenue about the change in use of the property. The property will be subject to Land Tax when it becomes available for rent.
If the property is mortgaged, you should also notify your lender to remain within the terms of your loan. A higher interest rate will probably apply.
It would probably be worth getting a valuation done now because any capital growth that occurs while it is an investment property will be subject to Capital Gains Tax when the property is sold or is no longer an investment property. This can get tricky so if you haven’t already done so, you should do some research with the ATO to satisfy yourself that you know how this works.

The REA will take care of sorting out your land tax obligations.

Unless you have a strange loan it shouldn’t matter whether it’s your PPOR or an IP. People switch back and forth all the time without notifying their banks. You certainly shouldn’t have to pay a higher interest rate.

Lastly, the advice about getting a valuation done is incorrect. The calculation to determine your CGT liability is done by calculating the amount of time it was an IP as a percentage of the entire time you owned it and then that is the perctage of the entire capital gain over that time that you will be taxed. The value of the property when it first becomes an IP has nothing to do with it. You are also eligible for a 50% reduction assuming you have owned it over a year.

Best thing to do is see an accountant for any tax liabiltiies before you start renting it out.

Snarky 12:26 pm 18 Sep 12

(disclaimer – friend of mine)

Lovell Residential property management. Luanne’s the consummate professional.

ainsliebraddon 12:14 pm 18 Sep 12

Get a few quotes and get the agent to come and inspect the property. If they come and inspect the property it shows you the agent is keen and wants your business. I have a couple of investment properties and have found that if you go to an agent and say that another agent has offered you X then they will be happy to negotiate a rate. I think I pay about 7% inc GST.

Very Busy 11:51 am 18 Sep 12

Don’t forget about your statutory obligations. You will need to advise the Commissioner for ACT Revenue about the change in use of the property. The property will be subject to Land Tax when it becomes available for rent.
If the property is mortgaged, you should also notify your lender to remain within the terms of your loan. A higher interest rate will probably apply.
It would probably be worth getting a valuation done now because any capital growth that occurs while it is an investment property will be subject to Capital Gains Tax when the property is sold or is no longer an investment property. This can get tricky so if you haven’t already done so, you should do some research with the ATO to satisfy yourself that you know how this works.

gooday 11:34 am 18 Sep 12

Distinct Property Management – 6.6% fees including GST with a great online system and iPhone app. They don’t charge a letting fee when tenants re-sign the lease and they don’t have penalty fees if you cancel the agreement. The Landlords Club is also good, service is great from both.

poetix 11:08 am 18 Sep 12

Allow pets: you’ll find tenants who feel much happier about the house, and you.

cbjcurtin 10:26 am 18 Sep 12

I use independent, they are big, seem professional and charge 8% plus gst.

Good lick I hope you find good tenants, most are good but there are some not so good as well

XO_VSOP 10:13 am 18 Sep 12

Distinct Property Management low fees http://distinctpm.com.au/ and steer clear of LIVEin here is a good read and answers your questions http://the-riotact.com/property-managers/38552

Related Articles

CBR Tweets

Sign up to our newsletter

Top
Copyright © 2017 Riot ACT Holdings Pty Ltd. All rights reserved.
www.the-riotact.com | www.b2bmagazine.com.au | www.thisiscanberra.com

Search across the site