PAYG Variations

Extra Money in Your Pocket Weekly!

An often overlooked way in which Investors can improve their weekly cash flow is through a pay as you go (PAYG) variation. The PAYG system is a method of tax collection that was introduced in July 2000 to replace previous versions of the same system, such as pay as you earn (PAYE).

PAYG instalments are a system for paying instalments towards your expected tax liability on your business and investment income for the current income year.

A PAYG variation is an application to the ATO requesting that your employer reduce your weekly/fortnightly tax payments to reflect set deductions like depreciation on a rental property. In essence it is a way of decreasing the amount of tax you pay each fortnight to help with your week to week cash flow. Rather than a tax return at the end of the financial year, it is equivalent to receiving small portions of your return each week.

The flexibility this gives the Investor, combined with depreciation deductions identified by your Quantity Surveyor, can be of great help in managing investments and mortgage repayments.

Let's consider a hypothetical situation:

You have just purchased an investment property. If you were to take your potential tax return, including the extra deductions gained from your investment property, and divide it by 52 weeks, this would give you the approximate amount your tax is reduced by per week - creating the extra cash flow.

A Quantity Surveyor makes it even easier for you when you consider the extra tax deductions they are able to identify for an investment property. Talk to your accountant about PAYG variations and increase your weekly cash flow!

Tips for First Home Buyers!

Do your homework!!

• Obtain pre-approved finance for a loan so you know exactly how much you can spend before you even begin your search. Having a pre-approved loan means you will be ready to act immediately once you find the right property and there will be less chance of someone else beating you to it. Make sure you have your pre-approval in writing from your lender.

• You may have fallen in love with a property but be sure to do your research before getting too attached or making an offer. Important factors to consider when determining what you are prepared to pay include the position of the property, the size (how much property are you getting for your money), the condition and if any upgrades are necessary and future capital growth potential.

• Understanding the real estate market you want to buy in is the key to successful buying. Before making any final decisions, seek professional advice from somebody that has nothing to gain from you buying the property. Websites like www.apm.com.au, www.rpdata.com.au, www.ljhooker.com.au, www.realestate.com.au offer fantastic resources when researching the property market.

• Understanding the practicalities of buying a home and the sales process prior to making an offer or bidding at an auction can also help your chances of finding the right property sooner. It is a good idea to read up on how auctions work and tips on bidding, the same goes for making an offer on a property for sale, It is also worthwhile speaking to friends and family members about their home buying experiences.

• Creating a list of all the properties you have seen helps to keep track of what you’ve looked at, the features of each property and the asking price. Noting down everything from the number of bedrooms, parking, condition, agent’s details, asking price plus services and facilities in the area will help to paint a clear picture of each property. This is also a good way to compare the pros and cons of each property and what you may need to compromise on.

Email me at etrezise.leeming@ljh.com.au for a property comparison form! This will help you keep track of the properties you have viewed and their pro’s and con’s.

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Come and see your property!

Many landlords do not realise that it is well within their rights to attend routine inspections undertaken at their property.  Many clients that move to us from other agents have not been aware of this and in some cases have actually been told the exact opposite!

We recommend all of our landlords exercise there right to attend an inspection at least once a year as although we provide them with detailed quarterly inspection reports with accompanying photos, nothing provides the same clarity as seeing things with your own eyes.

It is quite common for our property managers to alert owners to small maintenance items in successive reports, however as we all know a small problem can over time become  a big problem if approval for repair is not given in a reasonable time.

Seeing your property annually can help to ensure small items are attended to and can also help to further alert you to areas that may need attention in the future. It can also provide you with peace of mind that your property is being well looked after.

The law states very clearly that owners must allow for ‘fair wear and tear’ when leasing property. This is one the more difficult areas for property managers to handle & manage fairly.

Annually viewing your property helps to keep you up to date with the wear and tear on your property. This is especially important for landlords who have long term tenants (3+ years in a property) as we must allow for more wear and tear than would  possibly be acceptable for a shorter tenancy. 

The age of the home also plays a large part in determining what ‘acceptable wear and tear’ is, as well as the condition the home was in when your tenant originally took possession. 

Written By Emma Trezise - Business Development Manager LJH Leeming

WA agents reject push from Canberra

Real estate agents in Western Australia have expressed strong reservations about the fallout from a Federal push to create a national licensing system for the profession.

And it seems the WA parliament agrees, with an Upper House Committee looking into the state legislation required to meet the Commonwealth’s request, recently rejecting the proposal.   

President of the Real Estate Institute of WA, Alan Bourke, said on the face of it the proposal to have a national license for real estate personnel made good sense, but that the devil was in the detail.

“The plan from Canberra is broadly to ensure that when workers move interstate their licenses are uniform and recognised across state borders,” Mr Bourke said.

“While on the surface this makes perfect sense when it comes to real estate agency in WA the proposal has the effect of watering down our existing high standards and lowering the benchmark for training and for ongoing professional development.”

Mr Bourke said buying a house was the single biggest investment most Australians will make and that REIWA is adamant that the key to providing a low-risk professional service to home buyers is by mandating a high level of qualification and ongoing professional development. 

“Whilst it is important to have a high level of initial training, it is equally important that agents are kept up to date with changes in the industry including government requirements and the regulatory environment agents operate within.

This requirement is not contained within the current Federal proposal,” Mr Bourke said.

The Board of the Real Estate Institute of Australia, which met in Perth at the end of June, has called for the Federal Government, States and Territories to agree to a national licensing system which requires agents to achieve:

• a diploma level for licensing;
• compulsory continuing professional development; and
• requires licensing for commercial agency work.

The national licensing scheme is due to start in July of 2012, however Mr Bourke said the industry would continue to lobby for changes so that the professional safeguards currently in place are not undermined. 

REIWA - http://reiwa.com.au/Faq/Pages/News.aspx