Payment of PM fee

[smator]

Hi guys

Read a lot on the forum about capitalising expenses as they are deductible. Just wondering if anyone has been able to do this with property manager fees as they usually deduct their fee from the income? Has anyone arranged to pay the management fee separately and thus receive all the rental income?

 

[Younginvester]

for what purpose would you want to do that? Just sounds like hard work to me.

The way i see it, there is no technical difference in recieveing say $1000 rent income, the agent deducting $100 expense from the monies held prior to paying you $900, than for the agent to pay you direct $1000 income and then you pay them $100. The income and expense columns are the same on paper, therefore the tax assessments are the same. Unless I have missed something.

Cheers

 

[Terry_w]

Unless I have missed something.

Cheers

Debt recycling.

 

[smator]

for what purpose would you want to do that? Just sounds like hard work to me.

The way i see it, there is no technical difference in recieveing say $1000 rent income, the agent deducting $100 expense from the monies held prior to paying you $900, than for the agent to pay you direct $1000 income and then you pay them $100. The income and expense columns are the same on paper, therefore the tax assessments are the same. Unless I have missed something.

Cheers

Capitalise the pm fee (interest will be deductible) whilst receiving the full rent income which can be used to repay non deductible debt.

 

[Younginvester]

Capitalise the pm fee (interest will be deductible) whilst receiving the full rent income which can be used to repay non deductible debt.

please tell me more. I am interested.
Where do you draw down the money to pay the PM fee? LOC and then claim interest on LOC? What techniques do you use to keep the interest charges seperate for deductable vs non-deductable?

Thanks

 

[Scott No Mates]

Have a LOC for deductible expenses don't mix them.

Sounds good in theory but getting an agent to stand in line as an unsecured debtor might be a whole other discussion. They collect the rent take their cut then pay you. So unless you're prepared to pay them upfront before they remit the income it's not gonna happen.

 

[Rixter]

They collect the rent take their cut then pay you.

Reminds me of the ATO.

 

[Xenia IM]

Reminds me of the ATO.

I know hey - it's a great business model

 

[Xenia IM]

I'm not sure why you would want to do this???

However one way it could be done ) if you want to show no agent fee deductions on your statements), is to pay out contract value up front to the agent - their entire agent commissions for the value of the contract, then ask them to reduce charges to zero on the software - as it is already paid.

PM software automatically deducts all agreed costs and it would be a pain in the butt for anyone to have to remember to manually turn this off for one client every month when there is a disbursement. Most will not bother.

The upfront payment would be one way to negotiate with a PM to do this if you really wanted to show no charges for whatever reason you are talking about...

 

[Terry_w]

I'm not sure why you would want to do this???

In order to borrow to pay rather than use cash which could be used to pay down non deductible debt.