How to be a property owner’s best friend at tax time

Helping property owners make the most of deductions on their investment properties could definitely earn you some brownie points. It can be a win for tenants too when maintenance on their home gets done in a timely fashion. Find out how you can offer helpful guidance so your owners can be one step ahead with their spending and record keeping.

The end of the financial year is something of a mixed blessing for property managers. It’s usually a bottleneck for paperwork and reporting as owners need their income and expense statements ready to go for tax accounting. But on the positive side, this is also a time when it can pay for owners to get on the front foot with spending money on their investment property.

For some types of maintenance and replacements items, owners can claim a tax deduction in the current financial year. Other big-ticket buys – such as a brand-new oven or cooktop – won’t bring them the benefit of a one-off deduction for the full price. But they will get to save on their tax bill a little at a time by depreciating the upfront cost over a few years.

As a property manager, it’s not up to you to offer advice on what owners can claim as a deduction and when. That’s definitely a job for their accountant. But what you can do as a value-add is be proactive in reminding them that spending on their property before 30 June will mean a much shorter wait to realise the benefit of a potential tax deduction.

What needs attention?

Given that the end of financial year is in the middle of winter, hot water systems, reverse cycle aircon and any heating appliances should be on the list of things to consider servicing. Some timely maintenance could save tenants from shivering their way through a winter weekend. Plus, demand is likely to be lower for aircon installation, so maintenance teams will have more time for a service visit.

Window furnishings and cooking appliances are other things that can have a positive impact on your tenants’ quality of life. A cooktop or oven that’s on the fritz is far from ideal and if a property doesn’t have decent blinds or curtains, it may have been months or years since tenants last enjoyed the luxury of a sleep in. Replacing or upgrading items like these isn’t cheap, but they’re both pretty essential for a property to be at its most comfortable and liveable.

Taking care of maintenance outside can be a win for protecting an owner’s investment as well as tenants’ comfort and peace of mind. Keeping external paintwork looking good is also vital for protecting a building. A roof that stands up to the heaviest rainfalls and secure fencing and gates are also in the interests of both owner and tenant. Owners want their property to stay dry and keep out unwanted visitors. Tenants enjoy these benefits too and will often be extra keen to rent a home with a private outdoor space where kids and pets can play in safety.

Be more than a messenger

Being the one to get the ball rolling with a timely conversation about maintenance issues is definitely worth doing to stay in your owners’ good books. What can make this interaction even more valuable is being on top of the problems that need solving and ready with the answers your owner needs to get the job done.

The first part comes from keeping track of outstanding issues and with the right tools and processes for your routine inspections, this can be a breeze. In the Kolmeo app you can easily update your inspection templates to log an issue needing attention in the near future and automatically flag this in the summary report. Taking a quick glance at the last few reports before your tax time phone call with an owner will give you the prompts you need for any issues at their property. And if it’s something you’ve already flagged in the past, there’s no harm in checking in to see if now is a better time to take care of it.

You can also save yourself and your owner a lot of back and forth by having quotes at the ready from your trusty trades. An owner isn’t going to give the green light for a repair or maintenance visit unless they know how much it is. And if they’re unsure about meeting the cost from their rental income, have some alternatives up your sleeve. This is also a good time to point out that owners can claim a deduction for work that’s been invoiced in a financial year, even if that cost has yet to be paid in full.

Keeping accounts simple

This brings us to another important role property managers play in the whole accounting process. For the sake of simpler record keeping and reporting many owners will opt to have all income and costs going through their agency. This means they get a single statement for the financial year, with all costs and income logged and ready for their tax return.

But in a situation where an owner can’t cover a cost from the balance of rental income in their trust account, this approach to record keeping can get tricky. If they make a deposit into that account from their own funds, this needs to be flagged as money that isn’t income. Or if they want to pay an invoice some other way – from a different bank account or with their credit card, for example – this needs to be somehow added to the owner’s financial records.

In designing our payment management system for Kolmeo, we wanted to keep things simple but flexible for owners who we know can experience a cashflow crunch from time to time. So we’ve allowed for different payment options to be used, such as direct debit from an alternate account, while keeping all transactions in the one place. Owners can make payments using BPAY and in the future, they’ll be able to make payments from their account or credit card and even Buy Now Pay Later, with all costs captured in a single financial record and report for their property.

This can make a big difference to property managers and their owners, both for easier financial reporting after 30 June and for greater clarity on where an owner stands with their income and expenses for a property all year round.