The Australian Taxation Office
is aware that residential rental
property owners maybe
concerned about how COVID-19,
floods or bushfires have reduced
their income, whether it is through
tenants paying less or under
deferred payments plans, or travel
restrictions which have affected
demand for short-term rental
properties. New legislation also
affects the tax deductions that
owners of vacant land can claim.
Assistant Commissioner Karen
Foat explained that whatever the
circumstances, the most important first
step was to keep records of all expenses.
“Without good records, you will find it
difficult to work out what expenses you can
claim as deductions and to declare all your
rental-related income in your tax return.
Reduced rental income
The COVID-19 pandemic has placed
property owners and tenants in
unforeseen circumstances. Many tenants
are paying reduced rent or have ceased
paying because their income has been
adversely affected by COVID-19.
You should include rent as income at
the time it is paid, so you only need to
declare the rent you have received as
income. If payments by your tenants ATO has issued a guide to explain how to treat rental income and expenses, including how to treat more than 230 residential rental property items. are deferred until the next financial
year you do not need to include these
payments until you receive them.
While rental income may be reduced,
owners will continue to incur normal
expenses on their rental property
and will still be able to claim these
expenses in their tax return as long as
the reduced rent charged is reasonably
commercial rather than, for instance,
letting the tenants stay in the property
rent-free, or for token amounts.
This applies whether the reduction in rent
was initiated by the tenants or the owner.
Some owners may have rental insurance
that covers a loss of income. It is important
to remember that any payouts from these
types of policies are assessable income
and must be included in tax returns.
Many banks have moved to defer loan
repayments for stressed mortgagees.
In these circumstances, rental property
owners are still able to claim interest being
charged on the loan as a deduction- even
if the bank defers the repayments.
Short-term rentals
“We recognise that circumstances over
the past six months have seen many
short-term rentals see cancellations
or sit vacant as a result of either
COVID-19 or bushfires,” Ms Foat said.
In circumstances where COVID-19 or
natural disasters have adversely affected
demand, including the cancellation
of existing bookings for a short-term
rental property, deductions are still available provided the property was
still genuinely available for rent.
If owners decided to use the property for
private purposes offered the property
to family or friends for free, offering the
property to others in need or stopped
renting the property out they cannot claim
deductions in respect of those periods.
“Generally speaking, if your plans to
rent a property in 2020 were the same
as those for 2019, but were disrupted
by COVID-19 or bushfires, you will still
be able to claim the same proportion of
expenses you would have been entitled
to claim previously,” Ms Foat said.
To determine the proportion of expenses
that can be claimed for short-term rental
properties impacted by COVID-19 or
bushfires, a reasonable approach is to
apportionment expenses based on the
previous year’s usage pattern, unless you
can show it was genuinely available for
rent for a longer period of time in 2020.
If you or your family or friends move
into the property to live in it because
of COVID-19 or bushfires, you need
to count this as private use when
working out your claims in 2020.
Deductions for vacant land
no longer available
For the 2020 year, expenses for holding
vacant land are no longer deductible for
individuals intending to build a rental
property on the land but not yet built.
This also applies to land you may have
been claiming expenses in previous years. However, this does not apply to land that
is used in a business, or if there has been
an exceptional circumstance like a fire
or flood lead to the land being vacant.
So, if you are building a rental property,
you cannot claim the deductions for
the costs of holding the land, such as
interest. However, if your rental property
was destroyed in the bushfires and
you are currently rebuilding, you can
claim the costs of holding your now
vacant land for up to 3 years whilst
you rebuild your rental property.
Common Mistakes
Travel to rental properties
“Last year, we also saw a number of
taxpayers make simple mistakes such as
claiming deductions for travel to inspect
their rental properties,” Ms Foat said.
Residential property owners can’t
claim any deductions for costs
incurred in travelling to residential
rental property unless they are in the rare situation of being in business
of letting rental properties.
Incorrectly claiming loan interest
Taxpayers that take out a loan to purchase
a rental property can claim interest
(or a portion of the interest) as a tax
deduction. However, directing some of
the loan money to personal use, such as
paying for living expenses, buying a boat,
or going on a holiday is not deductible.
The ATO uses data and analytics look
closely to ensure that deductions are only
claimed on the portion of the loan that
relates directly to the rental property capital works and repairs
“Each year, some taxpayers claim
capital works as a lump sum rather
than spreading the cost over a number
of years. Others claim the initial work
needed to get a property ready for rent
immediately instead of spreading the cost
over a number of years,” Ms Foat said.
Repairs or maintenance to restore
something that’s broken, damaged or
deteriorating in a property you already
rent out are deductible immediately.
Improvements or renovations are
categorised as capital works and are
deductible over a number of years.
Initial repairs for damage that existed
when the property was purchased can’t
be claimed as an immediate deduction
but maybe claimed over a number of
years as a capital works deduction.
Short term rentals
We often see people with short term
rental properties claiming for 100
per cent of their expenses when they
actually use the property for their own
use or provide it to family and friends
for free or at a reduced rate. Properties
need to be rented out or be genuinely
available for rent to claim a deduction.
Factors such as reserving the property
or leaving it vacant over peak periods,
not charging the market rate and the
types of terms and conditions of the
bookings are all taken into consideration
when deciding if active and genuine
efforts are being made to ensure a
property is available for rent.If a property is not genuinely available
for rent, you need to limit your
deductions to the days when it is.
If you are allowing friends or family
to stay in the property at a reduced
price, you need to limit your deductions
to the amount of rent received.
Don’t forget to include all your rental
income, especially from sharing
economy platforms, we are matching
data received from these providers
to information in tax returns and will
be following up discrepancies.
Poor record-keeping
The number one cause of the ATO
disallowing a claim is taxpayers
being unable to produce receipts or
other documents to support a claim.
Furnishing fraudulent or doctored
records will attract higher penalties
and may also result in prosecution.
Rental properties 2020 will help owners of rental property in Australia to determine:
* which rental income is assessable for tax purposes
* which expenses are allowable deductions
*which records you need to keep
* what you need to know when you sell your rental property.
The guide explains how to apportion your expenses if only part of them are tax-deductible.
It advises taxpayers can no longer claim tax deductions for the cost of holding vacant land.
It also advised the situation if your rental property income and deductions have been affected by COVID-19 or recent natural disasters.
Landlords Insurance
Rewind back to this time last year, if someone had told us in a year’s time we’d be battling a global pandemic, it’s unlikely we’d have believed them. The last few months have been some of the most challenging times for all business owners. And if you’re a real estate agent, the banning of open homes in some states, a property market which quickly plummeted, and an overall negative economic outlook has probably hit you hard too.
While the fight is far from over, we have taken a look at the overall situation from an insurance lens, and clarify where insurance coverage has helped ease the burden for some businesses and individuals.
Landlord Insurance & Rent Default
Rent Default is a feature offered under Landlord Insurance policies that reimburse landlords’ lost rental income where a tenant either stops paying rent, vacates the property before the expiration of the rental agreement, or is otherwise evicted and there has been a loss of rent as a result.
As the economic crisis of COVID-19 hit, and more and more people became unemployed, paying rent was the one of biggest questions on everyone’s mind. With some guidance provided by state and federal governments, many landlords & tenants were encouraged to cooperate and come to mutually beneficial agreements.
Property owners who held Landlord Insurance with Rent Default have had some protection if their tenants stopped paying rent (without agreement from the landlord). However, those who didn’t hold this cover may have been at a disadvantage, and then some insurers stopped offering this option on new Landlord Insurance policies. Why was this done? Insurance is designed to cover for unforeseen circumstances, and as the economic crisis took hold, a tenant not being able to pay rent was no longer considered ‘unforeseen’. Such a turn of events has demonstrated the importance of Landlord Insurance, and not waiting until a disaster is imminent to take out this coverage.
EXTRACTED FROM REAL ESTATE MARKET FACTS
MARCH QUARTER 2020
Fast Facts:
March Quarter 2020
Quarterly Australian weighted
median house price is $786,923
Quarterly Australian weighted median
other dwellings price is $602,293
Median house prices up:
Hobart 4.5% to $575,000
Melbourne 3.7% to $893,000
Sydney 2.6% to $1,168,806
Darwin 2.2% to $470,000
Median house prices down:
Adelaide 1.8% to $480,000
Brisbane 2.8% to $525,000
Canberra 3.2% to $700,000
Perth 4.0% to $480,000
Median other dwelling prices up:
Adelaide 2.8% to $365,000
Sydney 2.7% to $744,672
Melbourne 0.6% to $641,000
Median other dwelling prices down:
Hobart 0.5% to $403,000
Darwin 0.7% to $302,750
Brisbane 2.6% to $385,000
Perth 2.6% to $375,000
Canberra 4.0% to $461,000
Fast Facts:
March Quarter 2020
Mar
2020
Dec
2019
Mar
2019
Proportion of family income to meet:
Home loan repayments 34.7% 34.8% 32.3%
Rent payments 23.5% 23.6% 23.9%
NSW New South Wales had the largest
annual decline in housing affordability
VIC Victoria has the highest decline in
housing affordability over the quarter
QLD Rental affordability remained stable
in Queensland over the past year
SA South Australia has the lowest
percentage of first home buyers
entering the market (25.9%)
WA Western Australia had the lowest
decrease in new loans for dwellings
over the quarter (-6.7%)
TAS Tasmania had the smallest
decrease in loans to first home
buyers over the quarter (-0.5%)
NT Northern Territory had the
largest improvement in housing
affordability over the year
ACT Rental affordability is at 19.0% in
the Australian Capital Territory
LJ Gilland Real Estate Pty Ltd
PO BOX 19
ZILLMERE 4034
电话：07 3263 6085
ZILLMERE 4034
电话：07 3263 6085
Our Valued Vendor wrote the following
to one of the potential buyers for this sale, for which we are thankful and
grateful:-
This part is a note for the possible buyers. Carlos and Linda have managed three of our properties and, to date, been the agents for their sales as well. We are not natural landlords, but when Carlos and Linda manage the properties, they treat them as their own. It has been their diligence and sense of ownership that has enabled us to handle investment properties. If you proceed with this purchase, we recommend that you keep them on as rental managers until the process is complete. They managed repairs and maintenance on all properties so that they were never a worry. They know the property and the tenants, are very familiar with the laws of the tenancy and therefore would be able to steer through the process of giving notice and the final weeks the occupancy. They are very diplomatic and appreciate the challenges of dealing with people. We have no concerns about the future because of the amazing ability of Carlos and Linda.
Regards Rod and Kathy>
This part is a note for the possible buyers. Carlos and Linda have managed three of our properties and, to date, been the agents for their sales as well. We are not natural landlords, but when Carlos and Linda manage the properties, they treat them as their own. It has been their diligence and sense of ownership that has enabled us to handle investment properties. If you proceed with this purchase, we recommend that you keep them on as rental managers until the process is complete. They managed repairs and maintenance on all properties so that they were never a worry. They know the property and the tenants, are very familiar with the laws of the tenancy and therefore would be able to steer through the process of giving notice and the final weeks the occupancy. They are very diplomatic and appreciate the challenges of dealing with people. We have no concerns about the future because of the amazing ability of Carlos and Linda.
Regards Rod and Kathy>
Solid Sale In An Extraordinary Time
It has been a pleasure to have Linda recently sell
a rental property in Ormiston, Brisbane, for us. Considering the contract went
through during Covid-19 Lockdown, it says a lot about Linda’s commitment and
tenacity.
The experience highlighted the following for us
about Linda.
She:
(a) has a great understanding of the market and
property values
(b) is extremely helpful and honest in her comments
and guidance
(c) follows up diligently and follows through with
information and progress
(d) is committed to the buyer or seller
We are thrilled that the sale was completed and
thank Linda and Carlos for managing the triple issues of tenants, seller and
buyer so superbly.
Review submitted by Rod & Kathy Jarrett
(vendor) on 07 May 2020 https://www.ratemyagent.com.au/real-estate-agent/linda-debello/reviews/18-evergreen-st-ormiston-aast11
Property in Capable Hands
Through the purchase of this property I’ve had the
pleasure to meet Linda whom I’ve come to know as a very genuine person with
in-depth knowledge about the current market and is very dedicated and
passionate about her work. With her guidance the entire purchasing process was
extremely smooth and hassle free.
This property had tenants prior to my purchase and
has been managed by Linda and Carlos since it was nearly new. I feel very
privileged and assured to have Linda and Carlos continue looking after this
property for me.
Verified by RateMyAgent
http://ljgrealestate.com.au/competitive-commission/
http://ljgrealestate.com.au/property-management/
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