Managing rental property - offsetting costs

L

lotus

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Hello

I purchased a rental property 2 years ago and have been very fortunate to have had the same tenant for that time - paid rent on time, kept place in excellent condition etc.

Alas tenant is moving out so I have advertised in the local paper and will probably start getting calls from Thurs. However I note that a lot of rental properties in the town are now managed by management companies. I dont mind showing people around etc and hope to get suitable candidates however I do not have an awful lot of time on my hands due to increased work commitments.

If I was to employ a management company to manage the property and find and vet new tennants, can I offset the costs against rental income ( ie I may aswell give the money to the management company and have an easier life because I will be giving it to the tax man anyway).........thoughts, opinions and advice appreciated.

Lotus
 
Re: Managing renatal property - offsetting costs

lotus said:
Hello

If I was to employ a management company to manage the property and find and vet new tennants, can I offset the costs against rental income ( ie I may aswell give the money to the management company and have an easier life because I will be giving it to the tax man anyway).........thoughts, opinions and advice appreciated.

Lotus
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Yes you can offset these costs against your rental income. Note that assuming your marginal rate is 42% this reduces your tax by 42% of these costs so there is still a net cost to you for this service. Of course for an easier life it might be worth it since the tax relief cuts the real cost almost in half.
 
I'd recommend NOT employing a management co. for several reasons i have mentioned on another post about this topic. Its not hard as you know cause you've done it past two years. Mngt co equals hassel in my eyes going on past experience.
 
I would suggest that one of the reasons your last tenant stayed for 2 years is because you didn't use a management company. The extra costs and hassle always end up on the tenant.
 
Interesting responses lads.

I just though the management option could be a good option as my work commitments have increased and will increase further quite shortly if I get promotion. I had no hassle with last tenant so may try again myself.

That said I wonder what happens in the case of where you have a management company managing your property and the tennant trashes the place? Are your losses minimised in anyway by having a management company.

Heres hoping for suitable tenants!

Thanks 4 replies
 
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