Insurance differences, costs and tax deductibility?

Discussion in 'Property Management' started by Medusa, 30th Apr, 2020.

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  1. Medusa

    Medusa Well-Known Member

    11th Sep, 2019
    Hey all you cool cats and kittens,

    I just purchased an IP free standing brick and timber house but have not insured it as yet :eek: Below are figures from CBA (my loan is with them), can you guys give it a look and see if anything is a miss or wrong? I feel like the 'loss of rent covered' should be ticked, and perhaps 'malicious damage' I told them that I want standard basic cover that other property investors get and this is what she sent to me.

    Purchase price 285K, market value 295K.

    Building cover
    Sum insured $170,000
    Building excess $1,000
    Accidental Damage Cover Not Selected
    Loss of rent extra Not Selected
    Malicious damage or theft by tenants Not Selected
    Contents cover
    Sum insured $10,000
    Contents excess $500
    Loss of rent extra Not Selected
    Malicious damage or theft by tenants Not Selected

    Total amount above comes to $84.99 per month or $1019.99 annually. Come tax time how much of this is tax deductible? I'm currently out of pocket by about 80$ per week in holding costs so trying to guesstimate my tax return soon.

    2nd question, I have a townhouse IP that I acquired about 6months ago, and also have no insurance on it. The property manager mentioned that the Body Corp covers the insurance in the rates I pay them (understandable) but what about loss of rent or any other insurances? Do I need rental protection insurance or anything else for a townhouse IP as well even though I am renting it out through the on sight property manager?

    Cheers :D
  2. Tom Rivera

    Tom Rivera Property Manager Business Member

    1st Jul, 2015
    South East Queensland

    Have you considered a brokered/specialist Landlords Insurance Policy? They're quite different from the add-ons that you'll find on your building and contents policies. Something like EBM is $315p.a, about a 3rd of your B&C policy.

    I'm pretty sure it's all tax deductible?

    There ARE gaps in body corporate insurance and I would definitely consider taking out a Landlords Insurance policy- someone like EBM, Terri Scheer, PIP, SGUA, AON, etc will provide the internal and tenancy protections.
    Propertunity likes this.
  3. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

    9th Jun, 2006
    Australia wide
    If the property is rented insurance would be deductible - building and loss of rent.