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Investment property - Complete Controller

In most cases, a home is seen as a liability, but in reality, that liability can easily be changed to an asset that pays a dividend. There are several advantages to turning your home into an investment property. To get started, you must understand the various advantages of converting your home into an investment and the steps it takes to convert to an investment. Generally, the rental currency is used to repay a home loan, but it is essential to consider how to go beyond merely making mortgage payments. Here’s a list of advantages of turning your residence into an investment property. Check out America's Best Bookkeepers

  • Downgrading:

Investors can claim on a devaluation of your property, including furnishings and fixings. These involve in-house services such as heating, cooling, blinds, and dishwashers. In the case of downgrading, the number of funds can be huge, mainly when it is worth a lot and newfangled. All you need is a reputable evaluator to get a devaluation plan to have a better idea of what claims you can make.

  • Tax withdrawal:

The primary reason for turning your home into an investment is the availability of tax deductions to the asset stakeholders. This enables stakeholders to claim tax deductions on several things, including interest expenses, agent fees, council rates, corporate body charges, and maintenance and repairs.   Check out America's Best Bookkeepers

  • Way to generate income:

One can easily engender income by merely giving his property on rent. The amount of rent you receive against your property is higher than the amount you are compensating on your loan. Most importantly, if the rent amount is not enough to pay off your debt, you can still declare this back in due.

Mentioned above are the advantages of having an investment property. Below are some factors that you need to consider if you are thinking of turning your home into an investment.

  • Mortgage:

Being a property owner, maybe you have paid a substantial amount to pay off your debt. So, there are chances that the number of tax deductions may not be as excessive. Even with that, you have already made a healthy amount of equity as far as this property is concerned. This amount of capital can easily be used as a credit towards other investment properties.

  • Capital Gains Tax CGT:

You are excused from CGT in case your property is the principal place of your residence. But if you are deciding to rent your property, consider that you must pay partial capital gains tax. Check out America's Best Bookkeepers

  • Gearing:

In most cases, properties are often deemed liabilities if they are not properly managed and can result in potential losses. This loss can be declared against your tax return file and will help you in reducing the taxable amount. Make sure that you have enough funds at your side to deal with this loss, and in the future, you can claim this back either at the end of the year or on a monthly cycle.

  • Loans:

Property owners lean towards having a loan, which includes interest and a principle that allows them to pay off their debts. In such cases, only attention is paid, whereas the principal is neglected. 

  • Property management:

You are now responsible for your valuable assets after giving your property for rent. Your responsibilities include repairing the house, collecting rent amounts, and finding tenants. Such responsibilities give birth to lots of stressful situations. To cope with traumatic conditions, you need to hire a property manager to control and manage all these responsibilities. Also, against these costs, you can easily demand your tax back.  

Should you turn your home into an investment property? This all depends on your goals and circumstances. You can generate a lot of income by making your home into an investment property. The earnings you get from tenants can solve many of your financial problems. But before turning your home into an investment, you need to consider all the relevant factors mentioned above.

Check out America's Best Bookkeepers About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity. Check out America's Best Bookkeepers

Home For Rent Sign in Front of Beautiful American Home
Renting involves dealing with various legal issues. With that said, we have to take into consideration who we are dealing with, keep check of all financial transactions we make, and go through the laws of the state that we are residing in.

Here are some legalities that you should consider whenever you are planning to rent.

The Terms of a Lease

The terms of a lease determine how often the renter will pay the rent alongside defining the time period the tenant will be responsible for paying the rent. There is a difference between leases and rentals. Leases often last a year with the rent paid on a monthly basis.

Generally, rentals are on monthly basis and even week to week occasionally.

The Obligations and Rights

Property owners have the right, according to state law, to take action against a tenant who is not paying the rent. These lease agreements are usually signed and agreed upon and bound both, the tenants and the property owner, together.

For example, if the tenant fails to keep the lawn in good condition, the owner of the property can take legal action.

Security Deposits

Even in the absence of a written lease, property owners can charge a security deposit. The security deposit is used to cover any damages that may occur in the household or if the tenant fails to pay the rent. The landlord can charge a maximum deposit equal to the rent of two months, according to law in California. This can vary from state to state.

Security deposits are to be returned to the tenant after the time period of the rent is finished. Any legal deductions are also returned back to the legal tenant after around 21 days from the day the tenant moves back.

Provisions related to lease

A lease or a rental agreement includes the following:

  • Renewal options
  • Whether the tenant is subject to any fees 
  • Rules regarding keeping pets or pet deposits
  • The time when the landlord may or may not enter the property.
  • Responsibilities related to maintenance

Some of these provisions may not be enforceable. For instance, it is a possibility that the landlord may not mention that they can enter the premises of the household without any prior notice or agrees that the renter has to pay for any damages that take place regardless of the fault.

Roommate Arrangements

The legal rights of the roommate of a renter differ from the legal rights of the tenant and the property owner. Similarly, like property owners, roommates do not have to engage in written arrangements.

Roommates can have a verbal agreement on splitting the rent including the supply of the utilities and bills that come on a monthly basis. Therefore, a verbal contract is formed between the tenant and the roommate which can be used against the roommate in case he violates it. However, it is always best to get everything in writing on an official contract.

Checklist of Damages and Issues before Renting

The lease will designate which party will be responsible for maintenance activities such as mowing the lawn or the maintaining the yard. Tenants agree to abide by local laws related to noise, nuisance, and enjoyment of the surrounding property. The lease may not allow the tenants to operate a business within the household premises. It is customary that a tenant walks through the house before moving in to document prior damages to the property so that they aren’t charged for them after their lease term.

Conclusion

Always make sure that you check the state laws wherever you plan to rent a house and never make a payment until you are completely satisfied with the landlord and property. Record rent payments, bills and all money spent in relation to the property in your bookkeeping records so that you have sufficient proof in any case that legal issues arise. 

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About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.