What are your property investor clients most worried about?
Tonight’s budget is certainly top of mind.
It is probably going to be the most watched budget ever – Channel 7 & 9 are even going to televise it. As will the ABC, and of course Sky. SBS might be the only station to not join the party. This budget telecast might get more eyeballs than the State of Origin footy.
There will likely be a moment when all property investors across the country collectively gasp – and then throw something at the telly.
Rumour has it (and aren’t there a lot of rumours around) that people investing in brand new property will fair better. It stands to reason with the need to boost supply. There is of course a lot more depreciation in a brand new property, which is why we have long guaranteed to find more than 10x our fee in depreciation in just the first year in a brand new property.
And we can often do those jobs without an inspection. That means fast turnaround and a reduced fee. We have written about this before here.
The uncertainty right now is all coming on top of increases in interest rates.
Some clients are becoming susceptible to outlandish ideas as they search for something, anything, to grab hold of. Have you heard of ‘finfluencers’?
There is also the ever tightening Airbnb squeeze. We are talking to the odd client for whom short term renting is becoming less and less viable.
All of which is prompting an increase in clients calling us with questions. Perhaps you are experiencing that, too? The best answer for clients with tricky depreciation questions is, ‘Hmmm. Not sure. Call these people…’
And if you have a client who you think might need a Depreciation Schedule, you can make an enquiry here. No need to work out if it’s worth doing a Depreciation Schedule. We’ll do that. If it’s not worth doing, we won’t do it.
Key Points
- 1. The ATO put out a warning about a week ago to ward against unqualified people spreading ‘tips and tricks’ online. When your clients call us, we always have a sensible conversation with them, and remind them to get in touch with you first before they do anything silly.
- 2. The City of Sydney is the latest council area to consider even further restrictions to short stay rental properties.
- 3. You might already be fielding more tricky questions from clients this tax season. If you get questions about repairs, treatment of Special Levies, depreciation in older properties, depreciation of renovations etc, just send those clients to us. You can refer them here.
Who are your clients looking to for financial advice online?
Interest rates are up, property prices are on the slide in many markets and there will be disappointment for investors in the budget.
So people are understandably a bit rattled. And it’s making them gravitate to things they might have avoided otherwise.
The ATO a week or so ago warned about the rise in ‘tips and tricks’ spreading online. You can read more on this here. We have had a few clients of late try to tell us that work they have done to their property can be claimed as repairs (vs improvements) because of something they have read.
They were disinclined to believe us as Chat GPT for them carried more authority. You’re probably encountering a bit of this, also. It’s no different from a doctor consulting with a patient who comes armed with opinions from Dr Google.
Then there are the Finfluencers. Yes, it’s really a thing. These are people on social media who spruik financial or investment advice. They’re everywhere now: YouTube, Instagram, Facebook, TikTok and a bunch of platforms you (and we) have probably never heard of.
Some really do provide good advice and help people, often younger people, understand some complex things. Remember, there is a whole generation, perhaps more than one, that gets their information on everything from these sources.
Then there are the Finfluencers who are sometimes paid to promote risky products.
They’re the online equivalent of the spruikers who used to run free investment seminars and fill rooms with people on a weekday evening. They were as slick as the people now online and were often also spruiking questionable strategies and flogging dodgy investments.
ASIC do their best, but it was easier in the old days to shut down an operator running physical seminars. It’s not so easy in this online world.
You will have clients exposed to this stuff, but hopefully they have a chat with you before they do something silly.
The national squeeze on short term rentals is getting tighter
The increasing squeeze on short term rentals is just another nail in the coffin for some investors.
City of Sydney council is the most recent major tourist location to look at further restrictions. Already, non resident owners of properties in central Sydney can only rent out their property on the short stay market for 180 nights. The council is about to get tougher. You can read more on this here.
People say, ‘Yeah, but who will know if a property is being rented out more than 180 nights?’ The answer? Neighbours. Most neighbours don’t like living next to an Airbnb and many keep an eye on occupation rates.
This happens especially in Byron Bay. The cap in Byron is 60 nights for properties where the owners are not living on site.
Lots of councils all around the country are grappling with short term rentals and many are coming up with their own methods to discourage them.
Owners corporations in buildings can go out on their own and introduce bylaws that prevent it happening. We heard recently of one building manager in Queensland who regularly prowls the grounds of his fiefdom with bolt cutters and removes lock boxes. Imagine flying from overseas and arriving in the evening at your accommodation and not being able to find the keys.
Victoria took a state wide approach and introduced their 7.5% levy on stays under 28 days. Booking platforms hold back the levy and pass it onto the government.
All of which has led many of our clients to putting their properties back on the long term rental market. It’s exactly what happened when Covid took hold and nobody could travel. There are whole households of furniture going onto Facebook Marketplace with possible resulting complications for accountants on how to treat the disposal.
And of course, the short stay rental platforms have shared income data with the ATO. You can read more the ATO’s data matching program here.
Depreciator can help your clients with tricky questions about Depreciation
You might already be fielding more tricky questions from clients this tax season.
We sure are.
If you get questions about repairs, treatment of Special Levies, depreciation in older properties, depreciation of renovations etc, just send those clients to us. You can refer them here.
We’ve written about all those things previously:
We’ll have those long conversations you don’t have time for, and if we think the client can benefit from a Depreciation Schedule, we’ll get one going. If we don’t think it’s worth doing, we’ll tell them.
And we will still answer their often endless questions.
If an enquiry becomes a job, you’ll be kept in the loop and that Depreciation Schedule will land in your inbox quickly – especially if we don’t need to inspect the property.
Enquire now for a property-specific assessment
Has this article reminded you about a client’s investment property? Residential properties, commercial properties, even farms, we do them all.
If you want us to talk to a client about a Depreciation Schedule, make a no-obligation enquiry and rely on our 20-plus years of experience in estimating depreciation returns.
