For those who self-manage

[buzzlightyear]

I am in the process over the next few months to self-manage a number of my existing portfolio.

Early to mid next year I will be looking at renting again (copping some of my own rental increase medicine), but I was wondering whether an office set-up to manage your portfolio can be claimed as an expense in managing your own properties eg part of rent / outgoings.

Or maybe I should ask, under what circumstances would this be legitimate, if at all?

 

[Player]

I would think so. I think the ATO would want you to keep some sort of diary for a period (similar to a motor vehicle log book) so you could apportion those expenses.

You would need to be able to substantiate the extent to which the expenses (pro-rata rent, telco expenses, internet, postag, computer depreciation ,ect, etc) were necessary to you deriving assessable income (albeit IP income).

A room or clearly deliniated area that serves as a functional office is also a good idea to deliniate the function from the rest of the house/dwelling.

Have a look here also:

http://law.ato.gov.au/atolaw/view.htm?docid=TXR/TR9330/NAT/ATO/00001

 

[Peter 14.7]

Yes, as a percentage of total space of the home you rent. So if bedroom used is 20% then you get 20% of rent, electricity, etc..

However it must be viable so it you were claiming $50 a week and your rentals were three IPS that would be hard to argue the room was 100% occupied for that use. In which case the ATO would say 20% divided by 7 days in 3% of the time it is for bus use.

Dont overcook it is my advice. Peter

 

[jasper]

I use the same theory as Peter (above). Never had a problem doing it ATO has never questioned this.

 

[buzzlightyear]

I use the same theory as Peter (above). Never had a problem doing it ATO has never questioned this.

Jasper have you been audited though?

 

[Peter 14.7]

ATO Audit?

I can say No and I dont ever, ever want to be.

I would come out clean but rules are very technical and open to interputation. Audits cost money to defend.

I learnt this with an arduous Workers Comp audit that went on and on for months. After 12 months, $1k of my accountants time, a week of my time and pages and pages of documents......the original claim of $60k under declaration became $600 for me personally and I was fined, get this, $29!

It gets better, I called and said where is the paperwork to pay the %#* $26 dollars, and I was told it was not worth THIER! while and I got a letter saying they would waive the amount, but don't do it again!

I don't have , god bless, and ATO story but I would put the cost for my Accountant at $2 to $3k and my time spent would be weeks. You need to consider that even if there is nothing to hide.

Note: I have business so I claim the 20% on a very viable business. On IPs I would only consider it if I had a significant amount. Personally even say 20 IPS would not take more than 1 day a week overall I would assume? Provided the room had to be set up as and office and stay that way, you would have case. If it could be done at a desk, I think they may ask "please explain".

This is my opinion, best to ask your Accountant, Peter 14.7

 

[mike0870]

First time investor, self manager - insurance question

Greetings all, I have just bought my first investment property, a furnished unit. Building insurance is covered under the body corporate, but can anyone tell me if I need contents insurance or is that the Tenants responsibility?

Cheers..

Mike
Alice Springs

 

[Collector]

You will need contents insurance to cover stuff the building insurance wont cover: Light fittings, blinds, curtains, floor coverings, cabinets, paint etc..


Better to get Landlord insurance - most cover contents.


Look into cgu landlord plus, ebm landlord insurance, terri scheer, dont go though banks or others like aami or nrma as there cover is limited

 

[mike0870]

Thanks Collector, will look into the Landlords Insurance. Appreciate the tip!

Cheers..