Newbie accts/ financial advice

[Wiz]

Hi folks. Some advice would be welcomed on a) where I've gone wrong, b) what I should do now and c) what I should do in the future.

Me and the missus bought a house in ChCh in 2007, height of the market. 4 bed townhouse, purchased for $275k, repayment mortgage of $255k fixed for 3 yrs at 8.98% = $1986/ month repayments. Expires October this year.

It was empty from Nov 08 and we covered the mortgage for that. From Jan 2009 we got it rented out for $395/wk, topping up the mortgage each month with between $200 and $500 a month. Also put in $140/ month for council tax. In that year we've spent about $2k on improvements on the property - insulation/ new paint.

The long term goal is to have the property paid off in time, though that's not going to be any time soon on a 30 yr repayment mortgage!

We earn about the same, and own our own house that we live in - currently on a 6 months fixed term repayment mortgage.

Apart from taking the money off the tenants and paying the mortgage/ doing maintenance, we've not done anything else with the rental so at some point I need to get involved with the tax man. What's the best way of doing this? Should I just do the online IRD application thing, or should I go to an accountant? I am leaning towards an accountant anyway, as I'm completely green when it comes to tax, however should this be an ongoing thing? What is the best way to set things up for the future so that we are making the most of this - admittedly long term - investment?

Finally - can anyone reccommend a good Chch based accountant who is familiar with rentals and property law?

Cheers all.

[steven anderson]

Your questions indicate you need to see someone to get some decent advice. I think you will find that you'll learn a bit and the money spent well worthwhile. Sorry don't know anyone in Chch.

[Rosco]

Go to an accountant! BUT, make sure they are a property accountant, as most accountants don't know enough about property.

Do you know about chattels valuations? If you property is quite cheap, it may not be worthwhile, but have a look at www.valuit.co.nz , just incase.

Ross

[Padeha]

Sounds like you may have income tax return obligations for 2008 and 2009 depending on when the property was first let or available for letting. It is likely that you will have a tax loss and you and your wife should be able to include your share in your individual tax returns and possibly obtain a tax refund depending on whether you paid tax on other income etc. To determine the correct tax loss you are likely to need an accountant as the depreciation calculations may be beyond you at least in the first year but any refund may offset the cost of the accountants. So get all your records together and go see someone. Any CA will be able to do a rental schedule.
I would not go too mental on allocating values to the chattels as pushing the boundaries may not be worth it especially if you have a loss anyway.

[foss]

It is better to sort things like this out sooner rather than later. The longer you leave it the more complicated things will get.
Don't worry about chattel valuations for now. Get the basics sorted first. There is good advice above.

[Rosco]

NO, get things right to start with. Don't just do anything and then hope to change later, as often you can't fix things that are done wrong.

For example, for a lot of rentals, chattels valuation is great (probably not in your case as its a cheap property - but shows my arguement) and can save thousands of dollars. But if you choose not to get a chattels valuation done in the first year, then YOU CANNOT USE chattels valuation in the future for that property.

I have lots of new clients who wish they had received good advice at the start, rather then finding out once its too late.

Ross

[SuperDad]

Don't worry about chattel valuations for now. Get the basics sorted first. There is good advice above.

A chattels valuation is one of the basics in my opinion.

Paul.

[Wiz]

Thanks for all the replies folks. I'll have a chat with the CPIA to see if I can get a referral to a good property accountant. As I've never heard of having chattel valuations etc it's going to be worth it.

What costs are involved with accountants? Is it a per hour basis? If so, what's a reasonable per hour figure?

[Monkeyboy]

Try Nigel Lundy of Metropolitan Advances 377 2799. He doesn't muck about. Ask him to do something and he's on to it straight away. Has a lot of properties himself so knows what he is talking about.

[Wiz]

Nice one Monkeyboy - I'll give him a shout.

[CJ]

A chattels valuation is one of the basics in my opinion.

The IRDs veiw is that everything is a building, and the TWG have said there should be no deprecation on buildings.

It could be that any depreciation will cause IRD interest!