What it not be nice if all tenants paid 12mths in advance!

Discussion in 'Commercial Property' started by Beano, 14th May, 2018.

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  1. KinG3o0o

    KinG3o0o Well-Known Member

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    all my properties outside Australia, paid 12 months deposit and after that 6 months rent advance as a minimum.

    Indonesia as rule of thumb rent is paid in 2 years and deposit is 2 years.
     
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  2. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    I cant think of a great tax outcome from rent in advance esp $550K of it. eg New tenant at 28th June you would have say $500K of rental income with next to no deductions. Next year you would have trivial income (1 mth) with 12mth deductions. Cashflow sounds good just discount it for the tax problems and the high PAYG Instalments etc.

    If you know and had time to sort it out a 12mth prepaid interest deal with the bank may offset it. Then next year DONT repeat. It would self correct itself.

    I have had a couple of clients with rent in advance this year. None of them were thrilled when they knew that tax issue. All asked if they could apportion the income across two tax years. NO, you cant.

    If its commercial rent the GST is payable on receipt in many cases.
     
  3. Beano

    Beano Well-Known Member

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    Would it be better if the tenant paid you one year in arrears then ?