Good Property Managers ... Help with Taxation Matters

Number 7 in a series of short articles for investors on What Good Property Managers Do by a Victorian educator/real estate agent.

A good property manager knows that there are three streams of financial benefit that an investor can receive from an investment property. The taxation benefit is one of these.

From time to time the Australian Taxation Office chooses different categories of taxpayer to audit. Investors can be the target group.

A good property manager can certainly help the landlord with documentary evidence for both regular taxation returns and taxation audits. A good property manager will advise their landlords of the benefits of the property manager paying all the expenses for the property. These then are recorded monthly on the rental statements and on the digital leger kept in the office. This ensures that all expenses will be recorded throughout the year.

A good property manager will also be able to do an end of financial year report for each property and it will itemise all the expenses and income for the property. The expenses would be things like council and water rates, land tax, insurances, Owners Corporation/Body Corporate fees, property management costs, key costs and all maintenance and other services done at the property.

This also reduces the cost to the landlord, as although the property manager will have a small fee for this report it will save the accountant and the landlord an enormous amount of time. No need to keep the receipts in a shoebox any more!

All these reports, receipts and financial statement provided by the manager are vital for the landlord to receive the maximum benefit which is allowed in law. Negative gearing is when an investor is able to claim a tax benefit because the cost of owning an investment property is more than the income received from renting the property to tenants. Cost of owning includes the interest on the mortgage taken to buy the investment property, the maintenance of the property and others costs such as property management.

An investor should never buy an investment for the tax benefit alone. It is granted by the Federal Government and as such could be changed at anytime. The investor needs to consider rental returns and capital growth as well as part of the overall assessment of a property.

Over time the rental returns on the property will grow as rents go up. The mortgage stays the same so after an initial period of negative gearing the investment property should move into showing a positive return. So negative gearing is not for the long term.

In all investment matters having an efficient team working for the investor can make a huge financial difference, as they become the keeper of your financial archives. If they are disorganised and inefficient that is how your financial records could end up. A good property manager will have digital copies of all invoices and will be able to produce them whenever needed. And email them immediately. A good property manager knows that paper copies are a thing of the distant past.

Make sure you choose a good property manager.

Toni Planinsek, principal of Planinsek Property Group, is happy to answer any queries through social media - Facebook and LinkedIn. She has prepared some free offers to help you on your road to becoming a successful property investor. To access yours go to

This article was published on 25 Oct 2014 and has been viewed 1037 times
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