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Question Regarding Deposits, Payments and Expenses

Discussion in 'Property Management' started by fullylucky, 20th Aug, 2016.

  1. fullylucky

    fullylucky Well-Known Member

    Joined:
    27th Jun, 2015
    Posts:
    409
    Location:
    QLD
    I have two questions wondering if you can help me...

    Q1. (not so important question). when you entering transactions, do you ever enter for the one item having both payment and expense? or is it not good practice, that is you should enter it twice as two separate items?

    For example, say you (the PM) helped the owner buy a new oven. The cost of the oven is $500 (no GST). Say hypothetically, you spent time and fuel to transport the oven to the IP and you should be rightfully paid a fee (expense) of $100 (has GST). So would you enter one item as Oven: payment: $500 expense: $100

    or would you enter two items:
    Buy oven - Payment $500
    Transport Oven - Expense $100


    Q2. (Important question.) How does Deposits work? They are different to payments and expenses but I'm not quite sure how they work in the grand scheme of things, when tenant pays Bond is this counted and recorded as Deposit? Also I heard sometimes there's not enough rent money in the kitty to pay for rates or other payments so sometimes owners make a deposit into the trust account for PM to use for paying payments? Can someone please explain how it all works? Is it like the "negative" payments? as they also don't have GST or commission etc?

    Thanks for your time.
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    8,957
    Location:
    Sydney
    1
    You cannot charge yourself for your own time so record only the cost of the item.

    2.
    A deposit from renters is held by a rental bond board so it is not income. You do not record it in your financials.

    Assuming residential.
     
  3. fullylucky

    fullylucky Well-Known Member

    Joined:
    27th Jun, 2015
    Posts:
    409
    Location:
    QLD
    Q1 but what if say it's for fire alarm inspection? and charge a expense to the owner? it has GST? but at the same time it costs to replace a fire alarm from bunnings that would be a payment?
     
  4. Scott No Mates

    Scott No Mates Well-Known Member

    Joined:
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    Location:
    Sydney or NSW or Australia
    If the expense relatesto your own property, in your name, you can't add your own labour BUT if the property belongs to someone else (or another entity eg. @notfullylucky) then you may be able to charge the owner these costs.

    If the property manager sends someone to test the alarm then you can claim the total amount. If the PM tells you to buy & install a new smoke detector you can only claim the cost of the alarm.
     
  5. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    8,957
    Location:
    Sydney
    Include gst in what you claim and labour if you pay someone to install it.