Why Does An Owner Of A Residential IP Pay Rates, But A Commercial IP Owner Doesn't?

Watermelon Man

Watermelon Man

Hello,

Not sure if this is in the correct topic area, but here goes.

Someone I know recently bought & sold 3 commercial properties side-by-side & said that they didn't pay any council rates on it; & when I asked why, he said: "...just because it's commercial property". So why does a residential property investor pay council rates & a commercial property investor doesn't? Both have tenants (sometimes on long leases each). WHY?
 
oops yeah, forgot to mention that! Yeah I'm the tennant, and current lease lanlord is paying all outgoings ie. water, council rates etc. - but having said that, I'm still paying one of the highest rents in Adelaide for the position I'm in :eek:
 
Watermelon Man said:
So why does a residential property investor pay council rates & a commercial property investor doesn't? Both have tenants (sometimes on long leases each). WHY?
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Because the legislation governing the residential side of things (RTA) specifically states that the Owner of the property is liable for all rates and taxes levied on the property. No negotiation shall be entered into. No doubt a particularly joyous inclusion into the legislation by the efforts of the collective Tenant's Union advocates....bless their little cotton sox. :(

The legislation governing the commercial side of things basically says it's up for negotiation between Lessor and Lessee. Oh Joy !!! :D
 
Dazzling said:
The legislation governing the commercial side of things basically says it's up for negotiation between Lessor and Lessee. Oh Joy !!! :D
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If I was the tenant (business) of a commercial property why should I pay to pay the council rates of such a property??? A bit one sided to the owner IMO yet on the residential side it's not - bloody crap!
 
LOL, hey WM, remember for people carrying on a business, all those expenses are fully deductible. Keep this in mind mate - if you can't beat 'em, join 'em. Buy commercial.

Mark
 
Watermelon Man said:
If I was the tenant (business) of a commercial property why should I pay to pay the council rates of such a property??? A bit one sided to the owner IMO yet on the residential side it's not - bloody crap!
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If I was the tenant I would pay it because no one would offer to pay it for me. It would be par for the course if I'm a commercial tenant. Why do I pay the council rates as a residential owner? Because I have no choice.

WM, what's your issue here? Different property types have different rules. They may not be fair, but so what? It is what it is.
Alex
 
Watermelon Man said:
why should I pay
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Of course you don't have to.....it's totally your choice......that's what negotiation is all about. If you are living in the Western world and you aren't in jail, you can come and go as you please....but ;

If you want to rent a commercial premises, you'll probably be asked to pay the council rates - or you don't get in.

Of course, as Ausprop alluded to earlier, it's not just council rates you'll be up for.

Try water rates, land tax, all insurances, PM fees, all repairs, all consumables, paint and re-carpet at the end of the Lease, all fumigation and pest control, security measures, strata fees if any, any keys and locks, cleaning....oh and of course a decent rent and GST on the lot. But I'm sure I've missed out a few.

One sided ?? Nah - depends on which side of the fence you view the situation I reckon.
 
it's just lucky for tenants that resi IPs are so heavily marketed in Aus and so close to the hearts of investors because financially they make no sense. it seems governemnts and lobby groups can keep pushing and pushing for resi landlords to keep pstumping up more and more and landlords dont seem to care... "excellent, another tax deduction!" is the cry of the day.
 
they have done but will they continue to do so? Are expenses covered or are you hoping for cap growth? excellent news if you have made them work tho. I know most of my resi IPs return about 1% net, and of course after interest they lose money, so other than the fact I can use the capital for other purposes they really serve no purpose other than to give me headaches in attending to some strangers personal problems every time their oven doesnt work or they feel a need for foxtel or whatever problem they woke up with today
 
It's also a case of options available to you. I'd love nothing more than to buy the building my business is in, but it's too expensive for me. I've also tried looking at warehouse and industrial, but that seems to be too expensive for me as well, expecially on commercial loan conditions (ie. lower LVR). So the option I am left with is to buy resedential RE instead.
 
steveadl i think lots of us are in that group, my guess is that a lot of commercial investors started in the resi world and then moved over to the commercial investments once they had enough funds to do so.
 
Watermelon Man said:
Geez... Someone's got their knickers in a knot!! :D Just a question I'm entitled to ask & give comment. :D
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Hello Mr melon

no issues here with you asking questions, however you seem to have ready made judgements against anyone questioning your reasons for asking simply trivial questions.

Commercial vs residential ... 2 totally different beasts.

Its like asking why a 5 tonne truck has 20+ transmission gears when a car has 5..!

Rabbaj
 
rabbaj said:
ready made judgements against anyone questioning your reasons for asking simply trivial questions.

Commercial vs residential ... 2 totally different beasts.

Its like asking why a 5 tonne truck has 20+ transmission gears when a car has 5..!

Rabbaj
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If you can't stand the heat, get out of the kitchen! Hey people throw dirt on me; so I'm allowed to throw some dirt back.:D
 
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