Eagle Eye Property Insights
Thinking of investment property or renting space in your home? have a read of the latest thoughts from our resident property guru Graeme Eagle.
1. As a property investor your rental income is the lifeblood of your business. With ever increasing costs such as interest rates, insurance, maintenance and reduced interest deductibility its important rents are monitored regularly and bought into line with market rent. I find investors who manage their own properties tend to under-rent their properties. An investor may be keeping the rent low for a good long-term tenant but at the end of the day they are not doing their tenant any favors if they move out and have to pay market rent for another property.
2. I recently completed a tax return for a client who had rental income from a flat-mate and it got me thinking. A lot people have a perception that they don’t need to pay tax on rental income from flat-mates or boarders when in fact they do have an obligation to do so under our tax laws. I’m sure a lot of rental income from these doesn’t get reported to the IRD. It’s important people are aware of this so they don’t get a nasty surprise when their tax return is prepared.
3. I have recently read that the banks have now got their systems in place for the proposed Debt to Income Ratios. These proposals set by the Reserve Bank limit the amount a person can borrow based on their income level. Owner-occupiers will be allowed to borrow up-to 6 times their income and investors seven times their income. I’m not sure whether the proposals will be bought in but if they are it will push a lot more lending through second-tier lenders and dampen the property market.
If you’d like to know more, contact us to discuss your situation.