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What is our total loss on this property last year?

Discussion in 'Accounting & Tax' started by Paterson00, 16th Aug, 2016.

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  1. Paterson00

    Paterson00 Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    193
    Location:
    Perth WA
    Hi all,

    I recently switched accountants to a more professional accountant after using the regular high street name for the last 3 three years and have had a fairly confusing return. I have refinanced a UK property which cost us a lot of money to get onto a better deal and also we purchased a property in the Gold Coast.

    My accountant tells me that a lot of the purchase costs are spread over several years such the LMI etc but none the less I was surprised to be told that my total loss on this Gold Coast property was $7119. I know that I am not accountant so I know there will be lots I do not understand but I expected that loss to be a lot more based on my figures below.

    Hoping I am right,

    Regards,

    Paul


    Income

    Rent $4940
    Total Income $4940

    Outlay for Outgoing

    Purchase

    Building and pest inspection $480.00
    BMT depreciation schedule $715.00
    Release Fee $169.00
    Rates (for 01/01/2016 to 30/06/2016) $392.60
    Water Access & Sewerage (for 01/01/2016 to 31/03/2016) $25.75
    Water Usage $101.05
    Administrative Fund Levy (for 01/02/2016 to 30/04/2016) $231.99
    Sinking Fund Levy (for 01/02/2016 to 30/04/2016) $47.04
    Council Rates $203.02
    Settlement agent lawyers $2,199.43
    Lender’s bank cheque charges $40.00
    Stamp duty $8,330.00
    Lenders Mortgage Insurance $3,034.00
    Legal/documentation/settlement fees $200.00
    Inv-BeLegal-compliance $65.00

    Renting out / Running costs

    Real Estate.com Advert $55.00
    Replacement Keys for agent $71.50
    Replacement blinds $572.20
    Preperation cleaning $675.00
    Letting Fee $418.00
    18/04/2016 7011773 * Rent Collection Commission $41.80
    18/04/2016 7011774 * Management Fee $20.90
    03/05/2016 7011959 * Rent Collection Commission $41.80
    03/05/2016 7011960 * Management Fee $20.90
    03/05/2016 7011961 * Bank & Trust Account Admin $6.50
    16/05/2016 7012050 * Rent Collection Commission $41.80
    16/05/2016 7012051 * Management Fee $20.90
    01/06/2016 7012238 * Rent Collection Commission $41.80
    01/06/2016 7012239 * Management Fee $20.90
    01/06/2016 7012240 * Bank & Trust Account Admin $6.50
    Depreciation schedule 15-16 Lisa $7,560.00
    Depreciation schedule 15-16 Paul Included in above

    Borrowing Interest
    Interest on the Bank West $47000 23.5.16 $160.45
    Interest on the Bank West $47000 26.4.16 $205.82
    Interest on the Bank West $47000 23.6.16 $176.95
    ANZ Credit card interest $11.61
    21 May 2016 CBA Mortgage Payment $891.60
    21 Apr 2016 CBA Mortgage Payment $914.56
    21 Jun 2016 CBA Mortgage Payment $879.98

    Administrative Fund 01/05/16 To 31/07/16 I0009298 $579.97
    Sinking Fund 01/05/16 To 31/07/16 I0009390 $117.60
    Overdue Interest Jnl Interest To 31/05/16 J0038700 $17.44

    Total outgoing $29,805.36

    Net profit / loss $24,865.36
     
  2. EN710

    EN710 Well-Known Member

    Joined:
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    2,093
    Location:
    NSW
    From memory only LMI can deducted over the course of 5 years

    Lenders Mortgage Insurance $3,034.00 --> $606
    Depreciation schedule $715

    B&P, Stamp duty and buying costs are for CGT (if I'm right)

    Property rental cost approx $681 (I don't miss the numbers)
    Interest payment $2875
    Admin fund etc $715
    Depreciation schedule 15-16 Lisa $7,560.00

    Total cost 13,152 (ish)
    Not sure if initial blinds and cleaning fees are deductible... better ask your accountant and look at all the numbers properly and see if the accountant missed anything
     
  3. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Location:
    Sydney
    Lmi is a borrowing coat deductible over 5 years. But first year it would need to be apportioned by nber of days
     
  4. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    LMI is NOT deductible over 5 years. It is deductible over 60 months. A small difference in years 1 and 6 occur otherwise. As Terry says - Use the number of days.

    Some of the settlement costs are deductible eg rates and strata adjustments if its rented. But otherwise many of these costs are CGT costs and arent deductible as they are capital expenditure.

    QS depreciation may add to the loss but it isnt a cashflow "cost"...Also new blinds may (or may not) be depreciable item/s rather than deductible.

    Your "profit / loss" isnt correct.
     
    JacM and Perthguy like this.
  5. Paterson00

    Paterson00 Well-Known Member

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    19th Jun, 2015
    Posts:
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    Location:
    Perth WA
    Thanks all. I knew i wouldn't be completely correct.

    I was really after finding out what sat where in the grand scheme of things and was hoping the accountant got it largely wrong and we'd be up for a bigger rebate. Lessons learned.
     
    Perthguy likes this.
  6. JacM

    JacM VIC Buyer's Agent Business Member

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    I think of a property as a little business. Expect to spend something at the start setting the business up and protecting it with important maintenance and such. Then the business can run well.
     
    kierank likes this.
  7. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    Location:
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    The ATO produce a very helpful annual guide to rental properties and eligible deductions. It may assist if you become familiar with it so you identify issues to discuss with your tax adviser. Just remember that almost all costs which you cant deduct may reduce a future capital gain or add to capital allowance deductions etc so its still worth identifying what is not deductible and keeping those records.

    https://www.ato.gov.au/uploadedFiles/Content/MEI/downloads/Rental-properties-2016.pdf
     
  8. Paterson00

    Paterson00 Well-Known Member

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    Perth WA
    Fantastic tip thank you
     
  9. Paterson00

    Paterson00 Well-Known Member

    Joined:
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    Location:
    Perth WA
    My thoughts exactly i just thought more was deductible in the first year after spending it. Lessons learned. This is my first ip that was bought as an ip. My other is my former ppor so lessons learned all the way. It's cash flow positive so I'm happy despite the return
     
    Perthguy likes this.