Free rental property seminars

The Australian Taxation Office (ATO) is holding a series of free rental property seminars as part of their ongoing commitment to assisting the community.

The seminars are designed primarily for rental property owners and cover a wide range of tax issues relevant to owing and maintaining a rental property.

Topics include purchasing a rental property, deductible expenses, repairs versus improvements, capital and private expenses, selling a rental property, capital gains tax and record keeping.

Bookings for the seminars are essential as numbers are limited. 

To register, phone 1300 306 275 and enter correspondence code 2804# or email investors@ato.gov.au with the names and contact details of those attending.

SHOULD YOU FURNISH YOUR INVESTMENT PROPERTY?

It sounds like a simple enough question – but in today’s current market how can you be assured that furnishing your investment property will bring all the benefits you predict. Whilst the opportunity to gain higher rents and some extra depreciation allowances may seem too tempting to resist, the downfalls of furnishing your property can by far outweigh these advantages.

Generally speaking, transient Tenants are the ones renting most furnished properties. The cost of these transient Tenants can be quite high compared to Tenants of unfurnished properties. As you are probably well aware, every time there is a tenancy turnover in your property there are additional costs, possible vacancy and let fees. Investors will also be required to replace the furniture on a regular basis to ensure it is clean, fresh, in good condition and adds value to the Property. There is also the problem of ensuring the furniture suits a wide range of personal tastes which can be difficult. Prospective Tenants may reject a property if the furnishings are not to their liking, despite the premises itself being ideal.

There are some benefits for furnishing your property. It’s important to market a furnished property to the right target audience. Furnished properties are wildly popular with short term lets and tertiary students for example. Property Managers can keep a check on the furniture and its condition during the tenancy and especially in detail at the end of each tenancy where furnishings are to be cleaned and in the same condition as at the start of the tenancy, with allowance for ‘fair wear and tear’ which can be high. This is usually factored into furniture selection to ensure items are able to withstand general tenancy use every day.

Deciding on whether to furnish your investment property or not can be an important decision and one that should not be taken lightly. Consider your options carefully in consultation with your Property Manager and Accountant for depreciation and taxation advice.

THE IMPORTANCE OF PERIODIC INSPECTIONS

In a recent decision of Parker v Moore, handed down in December 2006, the Queensland Supreme Court has again addressed the issue of whether a landlord will be liable in circumstances where they do not appear to have had notice of a defect at a property prior to an injury occurring as a result of that defect.

The court made it clear that in circumstances where express notice of the defect might not have been given, it will be necessary to examine whether a landlord has been given ‘constructive notice’ of the defect.  For example, could the defect have been discovered by an ordinary inspection of the property or was there some factor which should have alerted the landlord to the presence of the defect?

In this decision, the plaintiff tenant brought proceedings against the landlord after she fell from a balustrade at her rented property and sustained injury.  The plaintiff, who had been residing at the property for over three years prior to the incident, sustained significant injuries when she attempted to remove a hanging curtain.  After initially standing on a plank of wood which was being used to hold potted plants, the plaintiff stepped onto a balustrade above a stairwell.  The balustrade wobbled, causing her to fall forward over the balustrade.  The plaintiff sustained a number of injuries, including spinal fractures and lacerations.

In attempting to assess the landlord’s liability to the plaintiff, the Court made reference to the landlord’s duties at common law and the statutory duties embodied in the Residential Tenancies Act 1994.  Section 103 imposes an obligation on a landlord to ensure that a property is clean, fit to live in and in a state of good repair at the start of a tenancy, and additionally to maintain the property in such a state throughout the duration of the tenancy.

In assessing the extent of the landlord’s compliance with these duties, the Court found that the property generally exhibited a lack of maintenance and was in a poor state of repair.  The Court noted that the property manager had carried out periodic inspections during the plaintiff’s tenancy on the landlord’s behalf and forwarded the reports from such inspections to the landlord.

The plaintiff conceded that she had not noticed that the balustrade wobbled before the accident, nor had she been alerted to this by anyone else.  While an expert engaged by the plaintiff subsequent to the incident found approximately 20mm of movement in the balustrade, the Court found that the landlord was not aware of this prior to the accident and, additionally that it would not have been readily identifiable during an inspection of the property.  Furthermore, the amount of force exerted by the plaintiff stepping onto the balustrade far exceeded that which would have been exerted in the normal use of the balustrade.

The plaintiff, the Court found, was therefore the author of her own misfortune and the landlord and the agent could not have been expected to foresee such conduct.