Do I need an accountant?

[Roosterman]

Hi All,

First post, love the forum.

This year is the first year my tax affairs have become more than "simple", as I converted my PPOR into an IP.

I studied accountancy and although I'm not an accountant I have always done my own tax returns.

However I am being advised that since I now have an IP I should go to an accountant to make sure I get all the deductions I am entitled to.

My question is – do I really need an accountant to do my return when I have a pretty good understanding of what I can and cannot claim?

There is no depreciation applicable to my IP – my income is the rent and my expenses are the mortgage interest (IO loan), rates, strata, repairs, PM fees, water etc. It is actually pretty close to neutral in terms of cashflow.

Am I missing something here? I just do not want to spend $300-$400 getting my tax return done when I can really do it myself.

Thanks in advance
Roosterman

 

[JoshyBoi]

Rooster

I have a law and accounting degree...I chose to do law, and previously did my own tax returns...mine still is a pretty simple return, and even though you still do a lot of the leg work, I'd rather outsource it for 5 reasons...

1) they are more up to date with the relevant deductions;
2) they have streamlined process;
3) the accountant's fee is tax deductible;
4) ...for the same reason I don't do my own legal work...you reduce your risk and chances of liability should you make a mistake in doing it yourself...
5) hmmm...the 5th reason will come back to me i'm sure...

Cheers
JB

 

[JoshyBoi]

ahh that was it!

5) the accountant often pays for themself by saving you that fee in additional deductions or handy advice

 

[Luv2Travel]

ahh that was it!
5) the accountant often pays for themself by saving you that fee in additional deductions or handy advice

Agree, people often think they know what they're doing, and think they're saving money. I have a friend who has a number of properties, and always does his own return, to save money (he hates parting with it). When I bought a property this year and somehow it came up in conversation about me getting a quantity surveyors report so I could claim depreciation and he was very curious. He had no idea about this, and I suspect he's missed out on a good amount of deductions because he hasn't had this done on any of his properties as he had no idea. This is just one example, despite thinking he knows everything, I'm betting he's made a lot of errors, some of which have probably cost him more than if he paid a few hundred to an accountant.

 

[Roosterman]

Thanks Joshy and Biggles.

I guess in the scheme of things $400 aint that much, and with another IP on the way it only gets more complex from here..

 

[The Y-man]

Thanks Joshy and Biggles.

I guess in the scheme of things $400 aint that much, and with another IP on the way it only gets more complex from here..

There's also a time factor involved - ie. getting stuff all sorted by end of October (personal) vs end of March (for registered tax agents). Probably not much of an issue with 1 IP, but can get hectic with more - especially if statements are delayed etc.

The Y-man

 

[CruzAccountant]

$300 - $400 for one rental property. Wow, that's a fair bit.

There are usually 3 reasons why clients come to accountants:

1) Security - just the fact they have someone else looking over the numbers and ensuring that they are compliant

2) Networking - their accountant can sometimes be a source of business, or point of contact for other relationships

3) Efficiency - the work can be outsourced to an accountant which can free you up to do other things

As a property investor, point 1 would be the most relevant. There's no reason why you can't do your return yourself, but it's just that peace of mind that you claimed everything you're entitled to without claiming for things that you're not.

 

[BV]

$300 - $400 for one rental property is a lot.

It's not that you can't do it on your own but it's about getting it right.
My accountant often picks up on things I forget to include so he's worth every $.

Having someone double check your figures and helping you include all of your entitled deductions is important. Also, by using a professional your claims are verified by someone who is up to date with the tax legislation, and it's probably less likely that you'll be audited so you'll sleep better.

Try this guy and you'll thank me later (tell him you got his details from the SS forum and he'll look after you)
http://www.valsamisandassociates.com.au/contact.htm

 

[Gordon Farkus]

There's also a time factor involved - ie. getting stuff all sorted by end of October (personal) vs end of March (for registered tax agents). Probably not much of an issue with 1 IP, but can get hectic with more - especially if statements are delayed etc.

Perhaps if you have more than 20 IPs..., but geez if generally you can't get your act together within 4 months (ie by 31 Oct) and need another 5 months to get everything in order then that's a bit poor. Especially if there's a refund coming your way that will get better use in your hands than the ATO's.

 

[travelbug]

There is no depreciation applicable to my IP –

Roosterman

There's a good reason to get an accountant right there.

Why would you think that? Is the building not made of something? Are there no fittings in the place (eg stove, carpet, lights, curtains- I could go on but I think you get the idea)?

 

[coastymike]

The networking component is sometimes overlooked. We have done many cross referrals and dont receive any commissions but rather knowing that clients are helping each other out, growing their businesses together and as a result we usually end up with more accounting work so everyone wins. A recent joint venture between two parties resulted in cost savings of around 5% for one party and increased revenues of about $200k per annum to the other party. Unlikely to do much cross referrals at the one investor level but once you get into businesses and property development this can be a valuable resource for savings and private funding.

 

[Roosterman]

hi all, thanks for the info/thoughts

travelbug, I did speak to an accountant (as in, a one hour appointment for advice) and a quantity surveyor before I rented it out, the building is over 40 years old, the cosmetic renos I did were over 7 years ago....

Having said that, I think I'll find a friendly accountant for next year for the very good reasons listed..