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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?


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Renting out an investment property
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taninaus 7:51 am 23 Oct 12

Re the tax side of things – troll-sniffer covered most of it – it is worth noting that the principal place of residence (of a rental property) only goes for 6 years – allows for defense and other travelling workers. So as long as you are not moving into another owned property you can claim the place you are renting out as your principal place of residence and not get hit with capital gains tax – so long as you move back into it before 6 years expires (would have to check the tax rules if you sell it but not move back in before that).

I would get a property valuation before you rent it out to be assured that you have the current value – whatever the tax rules about capital gains are, then you can be certain that you are dealing with the right values and have proof of this. Last time my bank charged me for this I think it was under $200, so worth the investment and may even be tax deductable.

Re agents – I won’t recommend Independent – like mad scientist said, although they get promoted in IPG. Check who will actually be doing the property management, I have had the slick sales person with lots of experience turn into the newbie who barely knows the rules – I have learned to screen a bit better. I use Elders Gungahlin and the current group do a good job.

Jason. 10:52 pm 22 Oct 12

As tenants we rented through Cameron Real estate in Hughes. Small family run agency who were great.

As landlords, using (but not for much longer) Denise Flint Real Estate. Absolutely hopeless and nothing but problems from day one. Especially bad now we are changing agents. Avoid like the plague.

AngryIan 11:31 am 28 Sep 12

I would look at doing a long term sales agreement.
This will still allow you to have the income but not the taxes.
Happy to do the work if you want to go this route.
renttoown@homemail.com.au
Also will stop all the hassles of bad tenants.
As for pets what I do is have the clause that they have to “Make Good” at the end of the agreement and have a higher bond to cover this.

milkman 9:37 am 20 Sep 12

allyroger said :

milkman said :

allyroger said :

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

You need to sell the property first.

So if i rent out the IP for 1 year then move in and it becomes my primary residence but the value has gone from $500k to $450k, i can’t claim capital loss? Sorry for being dense in this subject, it confuses me.

Correct. You can’t claim capital loss because there hasn’t BEEN a capital loss. You bought the property and still own it – any gain or loss is not realised until the property is sold.

You make claims for deduction based on actual cash in and cash out (except for depreciation). There are other tricky bits, but they are variations of this basic theme. Also, don’t get depreciation confused with capital gain or capital loss, they are not the same thing.

Don’t get too worried about not knowing all this, just learn as you go.

allyroger 9:19 am 20 Sep 12

milkman said :

allyroger said :

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

You need to sell the property first.

So if i rent out the IP for 1 year then move in and it becomes my primary residence but the value has gone from $500k to $450k, i can’t claim capital loss? Sorry for being dense in this subject, it confuses me.

farout 9:31 pm 19 Sep 12

The value of the property when it first becomes an IP has nothing to do with it.

Not True.

http://www.ato.gov.au/corporate/distributor.aspx?menuid=0&doc=/content/00262404.htm&page=6#P193_12738

“Erin purchased a home on 0.9 hectares of land in July 2000 for $280,000. The home was her main residence until she moved into a new home on 1 August 2003.

On 2 August 2003, she started to rent out the old home. At that time, the market value of the old home was $450,000.

Erin wants the new home to be treated as her main residence from the date she moved into it.

On 14 April 2010, Erin sold the old home for $496,000. Erin is taken to have acquired the old home for $450,000 on 2 August 2003 and calculates her capital gain to be $46,000.

Because Erin is taken to have acquired the new home on 2 August 2003, and has held it for more than 12 months, she can use the discount method to calculate her capital gain. As Erin has no capital losses she includes a capital gain of $23,000 on her 2011 tax return.”

milkman 7:28 pm 19 Sep 12

allyroger said :

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

You need to sell the property first.

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