Do you authorise the property manager to make payments on your behalf for council fee, water...

@paper i personally get PM to pay for everything..

does help at tax time because PM will have an excellent record keeping system.

at the end of financial year

Get a property ledger from PM
Get a statement from bank
send it to accountant..

Save time and headache!

 

No one has mentioned debt recycling.

The benefits of paying bills yourself are:
1. You know it is being paid
2. You can use credit card and get points
3. You can time when you pay - especially around end of financial year, and most importantly
4. You could borrow to pay investment expenses and save interest on deductible loans

With 4 the compounding effects over multiple properties over multiple years can save you thousands of dollars.

Seek your own tax advice on this first.

 

I think people who say they don't have time to take a few seconds to pay some bills must have poor time management and need to look at their life to see why they have no time, and where their time goes. I get my bills consolidated and it only takes a mouse clicks on the billers list and the amount typed in, a few seconds while paying other bills. Once a year for council rates and 4x a year for water rates. You can do it during an ad if you can some-how find some time to watch TV, or perhaps while you have a cup of coffee if you have time to do that. Plus paying them your self you can manage your tax planning better by paying in advance or delaying, very relevant at the moment.

 

Absolutely, as others have said, set up direct debit if you're really that concerned. No brainer.

 

I would rather the control of paying these expenses myself. That way I know they are paid.

 

Especially now that your credit file can be adversely affected.

 

Agree with @Terry_w and @S.T !!!

Interesting and important points!

 

I pay it all myself for the following reasons:

1. Visibility over all the outgoings
2. I've setup automatic payments for water, council rates and insurance so not much admin work required
3. Knowing exactly how much is coming in rent each month helps me manage cashflow better

This might change as I invest more, but this is what works for me at this stage.

 

I manage all property expenses myself, paying the bill on the last day due via my credit card to maximise the money sitting in my offset account. Credit card is paid in full each and every month to avoid paying interest. I keep a rotating spreadsheet/schedule of which expenses are due so if the tax invoice doesn't arrive I know to chase it up. And it does happen from time to time that mail doesn't make it to my PO Box. Often when I receive the bill I pay it immediately but post-date the transaction for the final day due via internet banking. Then file the bill away for tax time and rotate that particular expense in my spreadsheet down to the next time it will be due.

 

If the credit card is only for investment purpose, then account fees and interests (if any) on "purchases" of council/water rate are 100% tax deductible.
If you have private purchases on the card, then annual/monthly fee should be apportioned. Interests charges are only deductible for those "purchases" that are for investment purpose.

 

It would be difficult to work out as the loan would be mixed. Best to avoid paying interest on a CC completely.

Also becareful if refinancing a credit card debt with a LOC. Some people spend money on investment expenses and then borrow to pay the credit card with a LOC, but you will get into trouble here if there are private expense because the credit card is a mixed purpose loan and you cannot selectively borrow to pay part of it without splitting.

 

After an incident where a bill was sent to the IP, addressed to me, tenant never forwarded it on to the PM or myself, it became overdue and started accruing penalty interest.

Only found out when a debt collector came knocking.

Now I pay everything myself on the credit card and have a healthy rewards points balance.

 

How could you not know the invoice was outstanding

 

Poor record keeping and lack of organisation skills on my part.

I learnt my lesson real quick!

 

Isn't it same if PM pays too? Why do we even want to know about it if we don't need to?

Lets say we have 5 IPs. That is about 5x$1200 = $6000 spent on rates & water. What would be the value of points you can collect from that expense? Can you really justify the fee for the awards points scheme?

In reality, does it really any difference (generally)?

Isn't it same as using the same borrowed money for a deposit? Using borrowed money for a deposit (instead of expenses) is a lot neater and easier to handle during tax time.

 

Everyone's situation is different.
Personally, I would rather spend my time with kids or reading this forum.

What other bills? Home bills are on direct debt.
It is not really few seconds. For each bill we need to
1. Collect posts, open & read
2. Log in to internet banking where the user name is not something easy to remember
3. Click though to get to the actual payment page and select the correct biller code
4. Enter the correct customer number and the amount.
5. Save the bill for tax purpose

If there is no significant discount then why would we want to pay rates all in one go?
Say we have 5 IPs then it will be 5 x (4 rates + 4 water) = 40 Bills a year

Again, everyone is different. I stopped watching TV most of the time. It is either News, Documentary (ABC or SBS) or Netflix. Either I want to fully relax or get our ironing done at this time.

Terry also raised this point.... but I'm not sure how much benefit anyone can get out of it.
In fact, tax time is lot easier if PM pays all the give you the summary for each property. Email system has the scanned bills if we are audited.

 

PMs might forget to pay, or they pay late. If you pay then you know for certain that it is done and you're not relying on someone to do it. Of course if you have a reliable PM then it doesn't make a difference.

Not a whole lot if the card is only used for paying rates and water. Going by your example, the average credit card rewards scheme gives you 1 point for each dollar spent - so 6000 points in all. I can redeem a $20 DJ gift card for 3700 points. So that means you could redeem $40 in gift cards in just over a year.

However, if you use the card for everything else (e.g. groceries, bills, etc) then it adds up. I can quite easily redeem $250 in gift cards in a year using points accumulated.

If you have a fee free card, then it doesn't cost you anything to use the rewards program at all. Otherwise it costs you whatever the annual fee is - and some cards allow you to use points to pay for the annual fee as well.

Really depends on your circumstances; some might prefer a hands on approach; others may prefer to get a nice neat statement at the end of the year.

 

Many years ago I actually received a court judgment because of a rates notice that was not paid. The agent didn't pay it and the first that I realised was after the court hearing. That judgment stayed on my record for 5 years. pain in the bottom it was.

Don't you have a card anyway? I have a coles card and get points from all sorts of things. I use these points to buy things that I don't need.

Well it could allow you to delay paying say a $1000 worth of bills until next financial year or allow you to speed them up to this year. May not matter for most people, but if you were planning to be off work next year it could save you $470 in tax.

Well, I guess it is similar. Save your cash for the PPOR offset and borrow costs. This is debt recycling.

 

Normally a point from credit card or Flybuy is worth around 0.5 cents per point.
6000 points = $30
$30 is enough for
1. 7 x Gloria Jean coffees
or
2. 30 x 7-11 coffees
or
3. 45 minutes of plumber's labour (exclude callout fee)
or
4. half tank of fuel for a normal car
etc...

 

I was going to ask about the rewards credit cards but the numbers have been done for me.... and they can have their $40 gift cards. not worth my time to play with that. I was hoping a flight from syd to bris at least.
There is more chance I'll forget than the real estate! I'll wait till i can build up a more bills and look at adding personal expences to make it worth while.