Who pays for what – additional costs to budget for

When you’re doing your budget for your investment property, as well as paying your mortgage, you do have certain financial responsibilities you need to budget for.

The good news is, many of these costs can be used as a tax deductible item so don’t forget to keep all your receipts and proof of payments. If you have professional property management who pays these on your behalf, they can supply you with an end of year statement that will show all these deductions that you can hand to your accountant.

Here are some general guidelines to help you consider what additional costs you may have to pay.

Utilities

  • Water

As a landlord the water bills will be sent to you or your agent and you are responsible for paying of this account. The account is broken down into several aprts being connection, supply and usage. You can on charge to the residential tenant the water usage part of this bill for them to reimburse you, if your property meets certain criteria’s.

  • Electricity, gas and oil

If your property is separately metered for electricity and gas it is your tenants responsibility to contact providers and have these services put into their names and it becomes their responsibility. The same applies for telephone, internet and Foxtel.

For bottled gas, the landlord pays for the costs and charges for the supply or hire of gas bottles. It is the tenants responsibility to pay for the gas refills or bottle swaps

Body corporate fees

If you have a strata or community titled investment property, there are some costs associated with this which you will be responsible for. This includes the body corporate fees, additional levies and other shared costs associated with the body corporate.

Government rates and taxes

You are responsible for all rates, taxes, or charges levied by governments, such as council rates and land taxes.

Repairs and maintenance

You are responsible for the general maintenance costs of your property, and unless damage to the property is deliberate, you are responsible for any repairs to the property. Repairs are classified as either urgent (such as a broken stove, burst water service or blocked toilet) or non-urgent (broken cupboard or ripped fly screen).

  • Urgent repairs

These types of repairs do need attending to promptly. If they are not attended to promptly, your tenant has the right to arrange for these repairs to be completed  – at your expense.

  • Non-urgent repairs

In New South Wales, the legislation states non-urgent repairs should be carried out ‘within a reasonable time’.

A good property manager will advise whether your repair is urgent or non-urgent and what the timeline is for when it should be fixed.

This list is by no means comprehensive and some costs may differ depending on the property and your Residential Tenancy Agreement. You can find more information relating to landlord financial responsibilities on the NSW Fair Trading website – www.fairtrading.nsw.gov.

If you would like to know more about additional costs associated with property investment or the benefits of our property management services, our knowledgeable and experienced team would love to help. With over 40 years of business in the area, we are one of Newcastle’s longest established real estate offices, so give us a call on 02 4956 9777.