PPoR to IP

Discussion in 'Property Management' started by justStartingMan, 11th Nov, 2017.

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  1. justStartingMan

    justStartingMan Member

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    Hi all,

    I'm in the process of converting my PPoR to an IP. Does anyone has a list of things that need to be organised? I have:

    - Landlord insurance
    - Depreciation report
    - Valuation? (I think this is required as we plan to rent this out for more than 6 years)
    - find a suitable Property Manager

    Any comments/recommendations are much appreciated. Thanks.
     
  2. Terry_w

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

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    Register for land tax.
    Tell bank???
     
  3. justStartingMan

    justStartingMan Member

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    Thanks for the reply. A few more questions to clarify:

    1) When is the best time to get the depreciation done? Now or when the property is already rented out (may be early next year)
    2) Similarly for valuation when is better to get it organised?
    3) For land tax, this is a unit. How do I know if I'm above the threshold? From the valuation? When should I register?

    Regards,
     
  4. Angel

    Angel Well-Known Member

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    Land tax is calculated on the value from the state's Valuer General's office. This is a completely different amount to the market value which is used to determine Capital Gains Tax (a federal govt tax).
     
  5. justStartingMan

    justStartingMan Member

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    Thanks for your replies. Do you know when is best to have depreciation schedule and valuation organised? Now or closer to the end of financial year?
     
  6. justStartingMan

    justStartingMan Member

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    Thanks all for your help. Could someone please be kind to advice when is best to have depreciation schedule and valuation organised? Now or closer to the end of financial year?
     
  7. Jess Peletier

    Jess Peletier Mortgage Broker & Finance Strategy, Aus Wide! Business Member

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    Valuation just before it becomes an IP. Depreciation now also.
     
  8. justStartingMan

    justStartingMan Member

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    Hi all, does anyone know a good valuation company in Sydney that can recommend?
    Thanks.
     
  9. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Hiya

    I'm not an accountant but I wonder if areal estate agents appraisal would do?

    I'm sure someone will confirm/correct me shortly.

    Cheers

    Jamie
     
  10. MyPropertyPro

    MyPropertyPro REBAA Buyer's Agents Sutherland Shire & Surrounds Business Member

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    For this purpose definitely not.
     
  11. Terry_w

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

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    On what basis do you say this?
     
  12. MyPropertyPro

    MyPropertyPro REBAA Buyer's Agents Sutherland Shire & Surrounds Business Member

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    For the purpose of future CGT calculation the ATO will only accept a valuation, not an appraisal. Most people would have seen the difference and it definitely has to be the former.

    I should hasten to add, it doesn’t technically need to be a licensed valuer, but someone who can provide “objective and supportable data”. The valuation process is more the focus than who actually conducts it, but there are parameters around who can do it.

    I guess it’s possible in theory that an agent could provide it, but I’m yet to see an agent who can provide a valuation in the correct format.
     
    Last edited: 10th Jan, 2018
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  13. Terry_w

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

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    So are you saying a real estate agent could do this?
     
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  14. craigc

    craigc Well-Known Member

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    For depreciation schedule, forum members BMT, depreciation, depot would be easiest before tenant moves in (more convenient).

    I’m with Terry, from what I’ve been advised and read for valuation, use written valuation/appraisal(s) from real estate agents. Get it in writing including comparable sales report to support the numbers used.
     
  15. MyPropertyPro

    MyPropertyPro REBAA Buyer's Agents Sutherland Shire & Surrounds Business Member

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    I’m saying that I believe technically, a real estate agent could provide a valuation if they knew how to and provided it in the correct format.

    However they cannot provide an appraisal that will be accepted for CGT calculations, as per my original post. An appraisal is not acceptable.

    My point is that a valuation and an appraisal is not the same thing. Most agents do not provide valuations, they provide appraisals and as per Jamie’s question, this would not do.
     
  16. Terry_w

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

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    What legislation are you referring to?
     
  17. MyPropertyPro

    MyPropertyPro REBAA Buyer's Agents Sutherland Shire & Surrounds Business Member

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    PS LA 2005/8 (though technically not legislation and withdrawn) but the content is broadly the same as the ATO publication "Market Valuation for Tax Purposes" so they have not replaced the product.

    Any more questions trying catch me out Terry? What is your interpretation?
     
    Last edited: 14th Jan, 2018
  18. Terry_w

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

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    I am not trying to catch you out, but trying to determine if your statement that a real estate agent's appraisal would be valid. I have always recommended a valuation be done, but am not sure if this is strictly needed or not.

    PS LA 2005/08 covers capital gains of a trust.
     
  19. MyPropertyPro

    MyPropertyPro REBAA Buyer's Agents Sutherland Shire & Surrounds Business Member

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    I'm not sure if this is a typo because I didn't say a real estate agent's appraisal would be valid, I said an appraisal would not be valid. I said a real estate agent's valuation might be valid provided the methodology was correct. Once again, for clarity, an appraisal and a valuation are two different things.

    Incorrect. What you've done is gone and Googled the reference I provided but you've missed the crucial detail that the search results have generated PS LA 2005/1, not PS LA 2005/8. PS LA 2005/1 covers the capital gains of a trust, not PS LA2005/8.

    PS LA 2005/8 can also be found via a search of the ATO legal database. To save you the trouble however, here's a screenshot:

    file.png

    Here is some further reading - Market valuation for tax purposes

    To my mind, it would be a brave person to rely on a real estate agent's valuation (not appraisal) given it appears the ATO is giving preference to a professional valuer in the information and details provided in the above link. They're not going out of their way to provide information on real estate agents and as they have clearly stated, "The valuation process should be adequately documented; if it isn't, we may not accept the resulting value as a market value."

     
    Last edited: 14th Jan, 2018
  20. Terry_w

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

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    Sorry that was a typo - not valid i meant.
     

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