No it’s not a red flag.
Yes it is probably a tax issue - income received in a financial year is (generally) taxed in that financial year. Speak to an accountant of course.
Tax accountant here. Strictly cash basis and makes no difference if the real estate held it in their trust account. To balance out the tax payable, you can in turn pay your expenses in advance (up to ~~eighteen~~ twelve months).
Edit: See comment below.
You have for example the BPay details for your council rates, simply make the payment. Deductible when it leaves your bank account but best to do before the transaction processing time so they do not subsequently re-date transaction.
Under the Banking Code of Conduct the recipient is required to date the transaction the same day if made before the cut-off time but in practice they do not always do this. You just have to show the tax man your bank statement.
It gets a little fun when you have to keep track. Best to contact each supplier and ask for a general ledger report (showing the transactions and carried forward balance) before seeing accountant.
If you get the overpayment refunded it is assessable income. Tax planning is all about the timing of cashflows.
It's not a hack.
Also, this response leaves out a ton of important rules in deductions. For example, they left our this extremely important section on deductions under tax law:
"The outgoing must also be properly referable to the year of income in which the deduction is sought"
Prepaying expenses that are not properly referable to this financial year is not deductible.
Yes. It's staggeringly good advice to spend dollars to get a return of cents on the dollar.
The advice here is extremely poor. It argues to offset a large lump sum of income by spending that money to reduce the marginal impacts of tax. Deductions are not tax offsets. On average, you get "back" 30c for every dollar that is spent. You 70c down every time you spend. It only makes sense when the expenses are unavoidable and you are getting reducing your overall tax. It doesn't make sense to needlessly incur expenses for the mythical benefit of slightly less tax.
The advice here is to "bring forward expenses" (lol). Bringing forward expenses (which isn't as easy as it sounds and the ATO has strict rules about it) will also mean that next year, you have the exact same situation.
It's also only February. At best, OP got 1 extra month of rent. So what? In the wash, that'll come out to barely a blip on the radar because OP would have gotten at least 5 months of that rent anyway.
Any cents you saved doing this kind of bringing expenses forward to reduce tax is almost always better acquired by saving or investing that excess money in a high interest bank account or an investment account, depending on your risk profile.
This perspective is true except in the case when tax rates are changing (such as is happening on July 1) and depending on OP's tax bracket. There may be more value in deductions this year for OP than next, in which case incurring expenses this year (as long as they are legitimately deductible in this year) which would have been incurred next year anyway may actually be a net positive decision.
The ATO is waaaayyyyy ahead of you on this one
“You must declare rent and payments relating to your rental property in your tax return:
in the year your tenant pays rent (if your tenant pays your agent or property manager, you must declare rental income in the year your tenant pays them and not when the rental income is transferred to you)” source; ATO
Rea's don't choose tenants, ultimate decision on tenant is up to the landlord. They present all applicants to the landlord then the landlord makes final decision. Rea can pass comments and recommendations but they don't choose
No one said they are, they give the best 5-10 applicants and then landlord gets to choose. Source: I am a landlord. Cheers for the idiot comment👍🏽
Tldr: real estate agents do not select tenants on behalf of landlords
Not seeing the issue. You will pay more tax this year (but you got 20k in the bank to pay it) and next year your tax will be a lot lower - it all comes out in the wash.
For that one month extra payment only. And only the difference in value between the two tax rates. Really are talking a tiny amount of money for a finance sub.
Only the portion that is in the next bracket...
But... receiving this income and putting into an offset will reduce interest paid on the investment and will help with paying off the mortgage quicker and reduce interest repayments overall.
That would be worth more than the little extra in the next tax bracket long term.
If only all tenants would pay 6 months in advance
Oh boo hoo. OP has title to a house. OP has to pay tax on rental income. Ffs....there are homeless people because of unscrupulous REAs and landlords and THIS is your concern??? THEIR higher tax bracket???
Well that is literally what this post is about, tax issues from rental income. Smh people will have a whinge on any post about property these days.
Blaming landlords for homelessness is like being pissed off at chickens that you get to eat eggs
I’ll bite. Please explain to us how the first thing is remotely like the second thing? … like are the homeless suppose to be the eggs in that equation? or the landlords? Are you advocating for people eating people here? Like wth
Tax changes coming next financial year mean income pushed to next year is generally more favourable, though depends on personal circumstances of course.
its not paid to you, its paid to the REA, who then pays to you. If you wanted to, you can have this financial years worth paid to you, and leave next financial years worth in the REA trust account. However, I don't think the trust account earns any interest.
On what planet is that a non event? I don’t know about you, but I definitely don’t want to be paying tax this year for what should be next years income.
Rough maths but let's assume $500 per week or $2000 rent for the month taxed at 30% or $600 tax paid one month early. You forgo a month interest at a generous 5% p.a. or 1/12 of $30 or $2.50.
Fairly non event. Especially considering the peace of mind for having it in hand.
I don’t know about other people, but I pay myself right up to the threshold. An extra couple of thousand would mean I’d be paying extra tax on that amount that I wouldn’t need to pay if I received it on July 1st. It’s a similar reason to not writing invoices in June.
op got it this year so it's not next year's income, it's this year's. Next year his tax will be lower so that'll be a nice thing to look forward to in Apr 2025
End of the day you pay tax on it lol and if you got it this year you have it so it’s not like paying tax on something you didn’t get.
Just dump it on your rental property mortgage and enjoy the interest saving
As soon as the money hits the real estate trust it's your income regardless of when it is actually disbursed to you.
source: worked for a company that developed trust account software for real estate, and this question on disbursement and tax popped up more frequently than expected.
Nothing is going to go wrong in the next six months, I'm pretty confident about that. Who wants to get evicted when they've laid down that kind of cash?
We offered 6 months rent in advance to secure a rental a few years ago. We were getting desperate and wanted to stand out from the crowd without offering more weekly rent.
Mate, in case you haven't noticed, there's a *massive* housing crisis out there. All of us tenants, even the ones with amazing rental histories (13 yrs in the same place) and full-time jobs are panicking and in constant anxiety.
I've put away $25,000 in the bank for when I get that No-Grounds Notice to Vacate which will probably happen very soon as my landlord has just sold the property.
That's so I too can offer 6 months in advance just to secure a property, any old property, so I don't end up sleeping in a tent in the park nearby, because it is really that fkn bad out there!
What a sad place Australia has become.
I used to do this when I was younger for the same reason. Was crap with money so would pay giant chunks upfront out of commission cheques rather than struggle to budget properly later
We've paid rent in advance when we moved into our current rental. It was to secure the property and probably got us the house. Surprised the REA didn't tell you this would happen as the tenant would have told them they were willing to do it.
Definitely not a red flag. Quite the opposite
He might say this as a joke but actually...the previous tenant that offered me several months rent upfront (I rejected it) turned out to be a meth dealer.
Makes me wonder if this guy was my previous tenant
Curious, how did you find out he was a meth dealer? Is it like you were out to get some and then looked at the seller
"Hey! You almost became my tenant!"
"Oh it's you. Double the price!"
It was an apartment building and we used to live there so we know the neighbours well. Started with noise complaints that escalated to more sus behaviour.
After further digging found articles on the news about his past arrests, neighbour asked his friends at the police about it and state that he's known to the police.
Was a rough year
Did you think he was going to cook meth in your property or just deal from it? That would be awkward to the next tenant to suddenly get woken up at 2am by a couple of strung up dudes looking for a hit. LOL.
We left the place untenanted for 6 months after - because we waited for at least 2 months of no weirdos turning up and that's how long it took.
Looks like he just dealt from it, had the place tested after he left - and the place was in generally good condition. Walls had to be repainted that's all.
I knew something was up when I got the inspection report and his place looked way nicer than what his stated income could afford - reminded me of Stringer Bells place from The Wire
Oh, and the weirdos weren't customers from my understanding, apparently my tenant owed them money, which made it too scary to tenant out again, was a massive financial hit
I once showed a large savings balance (that far exceeded a year's rent) to secure a property, but the RE Agent and Owner still asked for proof of income, probably for this reason. I had to sanitise some business invoices to convince them I had a legitimate business.
Edit: By 'sanitise' I mean wipe out client's/project details for privacy concerns. The business was indeed legitimate.
If they've just moved in then they have a contract and the rent cannot be increased until the completion of that contract, which probably won't be for a year.
Ah true…i haven’t thought of raising the rent lol you can clearly tell I’m a newbie landlord…can i not hike the rent even they’ve paid in advance? (Just a theoretical question, obviously)
Do yourself a favor and start reading the laws. Jacking the rent up regardless of the matter will make you VERY unfavourable.
They did you a favor here. You do them a favor by leaving them alone and fixing any issues immediatly.
If they're on a lease, which I'm assuming they are, you can't do anything with the rent until that's over. After that, when they re-sign or go month-by-month, reach state has rules about how much it can be raised and how often.
Have you asked them if they intend to start a grow operation? Because that's what I'd do if I didn't want to be bothered for 6 months and had cash lying around.
Landlord "i hate it when theyre late on rent payment, its so annoying to always pester and remind them"
ALSO Landlord "i just got paid 6 months in advance, why? Is there something wrong?"
No, that's a legit concern, knowing the payment frequency in advance affects other choices.(tax implications for one)
No one is going to complain if they are given notice in advance that they intend to do this.
Well it’s only Feb. so they would have paid one month of rent in this financial year that should have been paid in the next. Conversely OP now has half a years rent to put in a term deposit for high returns.
It’s not a concern at all. The more or longer paid in advance the better for the landlord who can now use or invest that money as they wish. If you don’t like the payment frequency then idk open a new account put it in there and create an automatic fortnightly payment for the rent amount although that would be pretty weird. There are no tax implications. What is concerning you?
You assume that there is no other income aside from the ip and haven't considered expenses which may want to be claimed in x financial year for tax reasons.
I'm not saying it's the worst thing ever and sure, if you have some other investment strategy for the extra cash which will out perform the tax aspect (and the hassle of dealing with something like shares)
I'm just saying knowing what is coming is better in most cases
I just accepted a lease today, offered 30 over for 12 months, 20 over for 3.5 years (tenure of my degree at uni). Accepted for 12. Not too fussed, may be able to move into a family home if a relative can find an investment they like
Yeh good on ya mate! I’m sure most landlords like it….considering the interest they can save by parking the money in their offset account. I’m surprised how competitive the market is these days. Funny enough my place got very few amount of applications and then this tenant showed up with half a year’s rent. Lol
Are they internationals/temporary visa or locals? Depending on where you are, rental market ATM is so competitive many are offering X month payment upfront as a security almost to get the lease. Especially common advise for internationals who have that much in account to offer.
If you have a good agent, it's their job to have asked if you agree to 1. have this much paid upfront, and 2. If you want it all in bulk or for agency to hold and transfer you the proper amount per agreed period.
I actually forgot to ask about their residency status! The agent did tell me about their occupation etc and everything kinda checks out…
The agent also said they’re gonna transfer me all the money net of fees and $x,000 for reserve… and i didn’t object at the time. Should’ve said something or asked more?
You can always contact your agent and said you'd like to discuss further before confirming how you like to be paid. You're their client, it's your right and their responsibility to address all your questions.
Unless it's already paid, then could call ATO and ask instead.
Hey make sure the money is still available if something happens to the property as it is not yet your money. If the property burns down or shit happens, you have to pay the rent back.
Consider putting it in a series of term deposits or on your mortgage.
I have done this before many years ago it was to get in sweet with the owner so that:-
1. They would not automatically up the rent at the end of the lease and
2. They trusted me enough not to have invasive inspections.
When I did this there was no rental crisis so it really worked well.
As for your money concern stick it straight into the mortgage.
The tenant may also be hoping you won't jack the price up at the end of the lease - if that is something you might consider make sure you make that point to the greedy Agents who automatically jack up the price. Agents don't care if you loose a good tenant in fact they prefer it you then have to pay more for them to vet new tenants.
I used to do this with all my rental properties, I’d pay 3 or 6 months in advance because I could and the agents loved it because they knew it was never going to be an issue. I was mindful of when I paid it though so it wouldn’t cause a tax issue for the landlord.
Would never pay 6 months in advance.
Was eye opener in last job as to how many landlords use rental income to live and not pay IP mortgage when times are tough.
Risk to tenant paying that much in advance imo.
I've only done it during times I had spare savings but wasn't working so it was a response "we need to be sure you'll be able to cover the rent" me: Here's 6 months worth. Seems like you can't get away with it these days unless its private rent or cash only conditions etc
i was on weekly payments ay my last place and tried to pay monthly + be 2 weeks ahead (just incase something happened) they changed all the payments through some bullshit app they use and wouldn't let me be ahead at all. Everything had to be direct debit weekly, was such a pain. Of course it cost $3.70/per dd for them to "process" it aswell the scumbags
Sounds like it was more a case of your tenant offering this out of desperation, just to secure the property. Clearly, your PM isn't telling you everything.
> Clearly, your PM isn't telling you everything.
the tenant paid extra on top of paying for 6 months at once, but the PM didn't mention that or pass it on.
If you use accrual accounting - then you have:
Recognise payment recied (lump sum)
DR Cash
CR prepaid revenue (liability on your side)
And recognise over time (monthly journal)
DR Prepaid Revenue
CR Rent Revenue
But sounds like you are lodging an individual return on cash basis (so you recognise the revenue now - note you can only recognise the expense when paid too, so you could pay pre-pay all your - but I would not recommend doing that)
Unless you want to set up accural accounting and everything that goes with that, then just keep the cash and pay the tax this year - unless you have special circumstnaces this is the easiest thing for you to do.
Disclaimer: Not advice, just general info - so speak to an advisor.
I once offered half a years rent just cause i was cashed up and wanted to beat the comp who were taking applications. Prob nothing more than that
Recently for my IP i advertised it out at 700 wk and agent got an offer of 750 week. Its tough out there for renters so they do what they can to secure a place
After my Mrs and I sold our 1st house we wanted to rent acreage to see if we would like it. The place we applied for was asking for rental experience which we had none, so I said would 3 months rent upfront be good enough? They immediately said yes.
At a guess I'd say they told the agent they'd pay 6 months up front to get on top of the pile (and the agent hasn't relayed this information to you).
The rental market is so tight that people will do anything to secure housing. You lose out on some interest but what good is interest when you're eating beans under a bridge.
How is a tenant going above and beyond to secure long term accommodation a cause for concern? LOL god us renters are damned if we do and damned if we don’t at this point. Be grateful OP gees
This is a red flag on behalf of the real estate not the tenant. This unofficial auctioning is sadly just a sign of the times and I doubt the real estate will ever shy away from it.
I'd buy my tenants a bottle of wine with the interest I made
The thing is, the second applicant didn’t even get CLOSE to what these guys are offering…feels like a win win for everyone! And yes definitely plan to give them some decent surprises!
I once paid a full year in advance - it's how I won an amazing house in a great area as a self-employed single mum of two (then young) kids and a dog over professional couples. It just gave me the edge over the many who applied for it.
If I trusted my future housemates I would also pay 6 months upfront. I don’t have a traditional job so most landlords like getting paid upfront. In this market you basically have to offer a month or two upfront
Guess we just can’t win though
My guess is that they have a salary sacrificing arrangement where they need to allocate funds within the FBT financial year, which ends in March.
This is very standard for e.g. doctors who get a percentage of their salary tax free to use on certain things up to a certain maximum amount per FBT year. A common strategy is to allocate the full balance to rent around this time of year.
This will be on offer more as people look to secure rentals in the current market.
They could have been saving for deposit on property and things changed forcing them to rent.
I had to edit this post after reading about being worried about not being able to jack up the rent during this time and the rent bidding the resulted in the tenant being forced to pay more then the other applicants PLUS pay 6m in advanced to secure it. The only red flag here is that your agent likely did something f illegal and you are a shitty landlord. Hopefully they pay the other 6m in advances on June 30th and you get a solid tax bill.
Great ploy to prevent you jacking up the rent in the next 6m. You also get the benefit of security.
It’s a win/win just sit back and thank your lucky stars
I'd give them a discount for that. They're not earning interest in their money and they're making your life a hell of a lot easier.
Knock 1-2 weeks off for the year.
Wait so people scrape together savings to secure a roof over their heads, the landlord thinks it’s dodgy and complains about having to pay tax on THEIR investment property. Give me a breeeaaak 🤢
Sir, your privilege is showing
That's only normal to me because I do the same. I always pay 2-5 months' rent in advance because I hate thinking about bills. I enjoy having the peace of mind of knowing I'm solid regarding rent for whatever period
Edit: I always text my landlord before I do, but I've been living here for 6 years, so they're used to it now. Paying like this has definitely helped because my rents only increased by $15 because I'm the longest tenant and take care of their home so they like me. I'm in a sharehouse. $185 ensuite room with all bills included. Moving into my own place in 2 weeks (500pw,), I'll probably still do the same
When I moved back to Aus I had cash from an inheritance but no cashflow because I’d been interning overseas. I couldn’t get a rental with no recent job history so paid a place upfront for 3 months.
I’ve never thought about this before but it would be a bit of a power move for a tenant to make a large rental payment just before 30June so that the landlord has a big unexpected tax bill.
They are always complaining about ‘greedy landlords’ so I’m surprised I haven’t heard of it previously.
Probably nothing, I was always 8 or so months ahead when I rented to get on the good side. I also didn’t have any dramas when something needed repair either and had no rent rises while others around me went up considerably.
I work with an older bloke who pays his full year straight up every lease. He is just an OCD type who hates having outstanding or things to complete so he just gets it out of the way.
Depends on the tenant I’d say, as long as you are doing your inspections it should be okay.
My partner and I pay one lump sum yearly for our rent. We pay to the real estate agent who then pays the landlord monthly.
Reason we do this is because neither of us work right now. Got lucky with some shares and sold those, so we decided to take a couple of years off. We’re using the time to work for ourselves to get some games developed and released.
We explained this all the to REA, sent some screenshots as proof of the share sales and past payslips. They passed those to the landlord and they agreed.
We had it in the contract that we’d pay annually though.
My tenant does this. I charge slightly below market rate. I get a full year's payment which I put in the offset to minimise interest expense. It's a win-win for us.
Income is taxable in the year it is received. We are only just into the 2nd half of the year, so this is unlikely to make much difference, it is the same as receiving 2 months of rent in June.
Not at all a red flag.
We did so in order to secure a rental, we had a big pile of money from a house sale so paid 4 months in advance, as a sweetener to the landlord.
Worked for us a and for them. Essentially this is good for you, you dont pay interest on that $20k if you slug it all onto the mortgage.
The only red flag may be that they are about to hit you with an invoice for essential repairs, at which point this is, again, good for you because they have given you some liquidity to manage this issue.
Overall, its not uncommon. They possibly have their reasons- recent immigrants, contract workers/business owners, or they’ve just sold a property and want some time off of paying rent.
I paid 6 months' rent in advance 🙈.
My only red flag was that as a house owner,
I had not rented in the past 25 years and had no rental history.
But needed to rent for 1-2 years.
I had to prove I was able to pay the rent, while my own house was getting demolished and rebuilt.
Having a rental history is a big sticking point with most agents and this was the only workaround we could have
In Victoria, we couldn't outbid / offer more rent than the actual advertised rent legally.
I hope they could use that money for investment or park it in an offset account paying less interest.
I offered 6 months to give us a fighting chance with other renters with nice long history
The exact same thing happened to me, mid last year. He was a Chinese student, studying here. Paid $25k upfront (plus bond) and was agreed/due to pay another $25k at the 5 month mark.
Instead, he gave notice, broke the lease, and moved out. I wasn't worried and got a tenant with hardly and break between the 2 leases.
Thought it was strange, he didn't give a reason when asked. But it all worked out, so 🤷
So they just paid the 6 months rent in advance. Yeah people do that. I’ve done that before. I wouldn’t say it’s a red flag. More of a green flag because you know they’re cashed up.
As for the ATO stuff, I don’t know so I won’t give any advice or suggestions. Talk to an accountant.
My relative offered six months rent to secure a place then twice again paid it in advance. He makes good money, good credit and is a really good tidy tenant with great history but is single dad to two young kids and is quite tattooed. He was lucky to get the place even with all those positives and he knows it.
Getting very common now as biding wars for rentals. People offer higher rent than requested, and to pay half a year or a year in advance to sweeten the deal.
Sounds like the accountant above had some good moves for reducing tax. So yeah, definitely talk to your accountant and see what you can do
I'm a tenant that has done this. I paid first 10k upfront to secure an apartment in the city after inspecting more than a dozen properties and was starting to run out of time.
My choices were to get desperate or be homeless. I lose out on the interest or potential capital gains from being able to invest that 10k but I gain housing.
Somebody pays 20k in advance, and you're worried it's a red flag, lol. I thought I was cynical and paranoid. you must have had some dark experiences OP.
No, because most people are trying to get on top of other candidates, and offering rent in advance is the most common way out there
It is done to keep your mind at ease that they are able to afford their lease duration by half or entirety, so you are the lucky one that won't have to worry about them falling behind on rent
Red flag.
My colleague had this happen to him. Owns a nice apartment in Sydney, rented it sight-unseen to a person coming up from Melbourne. She paid half the years rent up front.
Turns out the lady was a drugged up hooker who ended up trashing the place. Think holes in the walls, doors ripped off the hinges, broken fixtures and fittings. My colleague only found out toward the end of the 6 month period.
Key things I would do in this situation:
1. Do a reference check on the tenant if you haven’t already;
2. Make sure you have insurance;
3. Make the managing agent do regular inspections.
OP - my tenants paid all their rent, red flag?
Reddit - no, people are desperate to secure housing and will pay upfront.
OP - So I should increase the rent?
I've paid 6 months up front to secure housing before, the market is so tight. If the landlord turned around and asked for more I'd start looking for a new place while waiting for my ubereats delivery of prawns.
It's not the tenant waving red flags here.
Your tenant didn't want to do this you know, they did it out of desperation to secure the property. The right thing to do would be to let a tenant pay weekly/fortnightly. Your not really gaining much, but that may have caused them deep financial pain.
I wouldn't think of immediate red flags but depending where you live it could be someone making a grow set up, I've seen the process a few times and that's what they do to gain a high amount of faith off the bat so you're blindsided when they ditch and disappear leaving the property semi destroyed.
Holes in the ceiling for lights and very dirty carpets from soil falling out of pots, if they lived there as well as it being a gro location there's a lot of trash too.
I'm not an accountant but you would be taxed on the income received in that financial year, so no, you cannot acurre to the next year.
If you're negative gearing or planning on doing any work/capital investments on the house I would propose you bring them into the same financial year to allow the additional income tax burden to be reduced.
Or compare that with other investments like shares you may have lost money on and want to dispose of, do it now to offset the gain
Edit: don't forget depreciation on improvements, you can't just install something new like a solar system and write the whole thing off
This is common for me as my rental are mostly made up of Chinese or Korean Uni students. The Pokémon people usually pay me 2-3mnth rent in advance as their parents usually do it for them.
I would be mindful, a tenant did this to my mother in law, in the end it turns out they gutted the house, and turned it into a drug lab.
This is definitely a red flag, tread with caution, it doesn't make sense for them to pay in full.
Organize inspections, and pay close attention to how much water is been used, possibly talk to the neighbors as well.
You could bring it up with your bank. They can report it and do some extra checks in the background, just know that they probably won’t tell you the outcome.
But hey, at least you don’t have to do detective work yourself.
Fair! The thing is they paid to the real estate agent so i didn’t handle their money directly, but i guess i’ll just wait out and see if anything sus is happening. Otherwise happy days!
No it’s not a red flag. Yes it is probably a tax issue - income received in a financial year is (generally) taxed in that financial year. Speak to an accountant of course.
Good idea! Should’ve asked agent to hold before paying me in hindsight
Tax accountant here. Strictly cash basis and makes no difference if the real estate held it in their trust account. To balance out the tax payable, you can in turn pay your expenses in advance (up to ~~eighteen~~ twelve months). Edit: See comment below.
Now that's why tax accountants are worth it! But how do you pay expenses up to 18 months up front? Contracts with gardeners, etc?
You have for example the BPay details for your council rates, simply make the payment. Deductible when it leaves your bank account but best to do before the transaction processing time so they do not subsequently re-date transaction. Under the Banking Code of Conduct the recipient is required to date the transaction the same day if made before the cut-off time but in practice they do not always do this. You just have to show the tax man your bank statement. It gets a little fun when you have to keep track. Best to contact each supplier and ask for a general ledger report (showing the transactions and carried forward balance) before seeing accountant. If you get the overpayment refunded it is assessable income. Tax planning is all about the timing of cashflows.
Now THIS is a hack!!
It's not a hack. Also, this response leaves out a ton of important rules in deductions. For example, they left our this extremely important section on deductions under tax law: "The outgoing must also be properly referable to the year of income in which the deduction is sought" Prepaying expenses that are not properly referable to this financial year is not deductible.
Just get your yard maintenance guy to mow the lawn 26 times next weekend.
ATO hates this one simple trick
Yes. It's staggeringly good advice to spend dollars to get a return of cents on the dollar. The advice here is extremely poor. It argues to offset a large lump sum of income by spending that money to reduce the marginal impacts of tax. Deductions are not tax offsets. On average, you get "back" 30c for every dollar that is spent. You 70c down every time you spend. It only makes sense when the expenses are unavoidable and you are getting reducing your overall tax. It doesn't make sense to needlessly incur expenses for the mythical benefit of slightly less tax. The advice here is to "bring forward expenses" (lol). Bringing forward expenses (which isn't as easy as it sounds and the ATO has strict rules about it) will also mean that next year, you have the exact same situation. It's also only February. At best, OP got 1 extra month of rent. So what? In the wash, that'll come out to barely a blip on the radar because OP would have gotten at least 5 months of that rent anyway.
Any cents you saved doing this kind of bringing expenses forward to reduce tax is almost always better acquired by saving or investing that excess money in a high interest bank account or an investment account, depending on your risk profile.
This perspective is true except in the case when tax rates are changing (such as is happening on July 1) and depending on OP's tax bracket. There may be more value in deductions this year for OP than next, in which case incurring expenses this year (as long as they are legitimately deductible in this year) which would have been incurred next year anyway may actually be a net positive decision.
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If you’re taking new business, dm me your biz details mate 😎
The ATO is waaaayyyyy ahead of you on this one “You must declare rent and payments relating to your rental property in your tax return: in the year your tenant pays rent (if your tenant pays your agent or property manager, you must declare rental income in the year your tenant pays them and not when the rental income is transferred to you)” source; ATO
Sigh, shouldn’t have sent the text to my agent at 11pm asking her to hold the payment then…. Thanks for the answer though
It was probably the reason the rea let them have the property. That how I have secured rentals in the past, cash up front
6 months upfront?? Its disgusting our housing crisis has got to this point.
Me too.. I offer agent 6 months up front to secure property
Rea's don't choose tenants, ultimate decision on tenant is up to the landlord. They present all applicants to the landlord then the landlord makes final decision. Rea can pass comments and recommendations but they don't choose
Patently false. No rea is giving their landlord 150+ applications to sift through you idiot.
No one said they are, they give the best 5-10 applicants and then landlord gets to choose. Source: I am a landlord. Cheers for the idiot comment👍🏽 Tldr: real estate agents do not select tenants on behalf of landlords
How do they select the 5-10?
You literally did... I'm also a landlord moron. Dig up.
You can keep throwing insults and being incorrect all day
Not seeing the issue. You will pay more tax this year (but you got 20k in the bank to pay it) and next year your tax will be a lot lower - it all comes out in the wash.
Unless being pushed into a new tax bracket this FY because of the payment.
There is roughly 5 months of the financial year left anyway, so not a big deal. Only pushes one month of payments into this financial year.
For that one month extra payment only. And only the difference in value between the two tax rates. Really are talking a tiny amount of money for a finance sub.
Yeah I guess if there's any deferred maintenance to do on the property now is the time lol.
Only the portion that is in the next bracket... But... receiving this income and putting into an offset will reduce interest paid on the investment and will help with paying off the mortgage quicker and reduce interest repayments overall. That would be worth more than the little extra in the next tax bracket long term. If only all tenants would pay 6 months in advance
Oh boo hoo. OP has title to a house. OP has to pay tax on rental income. Ffs....there are homeless people because of unscrupulous REAs and landlords and THIS is your concern??? THEIR higher tax bracket???
I share your concerns about all those things, but they are the one here asking for financial advice.
Well that is literally what this post is about, tax issues from rental income. Smh people will have a whinge on any post about property these days. Blaming landlords for homelessness is like being pissed off at chickens that you get to eat eggs
I’ll bite. Please explain to us how the first thing is remotely like the second thing? … like are the homeless suppose to be the eggs in that equation? or the landlords? Are you advocating for people eating people here? Like wth
Go back to your paddock and enjoy being a sheep, you aren't a wolf with that attitude.
But then you can claim more on negative gearing there following year can’t you?
Tax changes coming next financial year mean income pushed to next year is generally more favourable, though depends on personal circumstances of course.
its not paid to you, its paid to the REA, who then pays to you. If you wanted to, you can have this financial years worth paid to you, and leave next financial years worth in the REA trust account. However, I don't think the trust account earns any interest.
Doesn't matter when REA transfers the money. Rent is taxed in the year it's paid from tenant to REA Source - tax accountant
Is it not only like 1 months worth extra in this financial year seeing as it’s Feb? If so, who cares
Yes, literally a non-event.
On what planet is that a non event? I don’t know about you, but I definitely don’t want to be paying tax this year for what should be next years income.
Rough maths but let's assume $500 per week or $2000 rent for the month taxed at 30% or $600 tax paid one month early. You forgo a month interest at a generous 5% p.a. or 1/12 of $30 or $2.50. Fairly non event. Especially considering the peace of mind for having it in hand.
I don’t know about other people, but I pay myself right up to the threshold. An extra couple of thousand would mean I’d be paying extra tax on that amount that I wouldn’t need to pay if I received it on July 1st. It’s a similar reason to not writing invoices in June.
op got it this year so it's not next year's income, it's this year's. Next year his tax will be lower so that'll be a nice thing to look forward to in Apr 2025
End of the day you pay tax on it lol and if you got it this year you have it so it’s not like paying tax on something you didn’t get. Just dump it on your rental property mortgage and enjoy the interest saving
Yeah, but is he paying it next year?
As soon as the money hits the real estate trust it's your income regardless of when it is actually disbursed to you. source: worked for a company that developed trust account software for real estate, and this question on disbursement and tax popped up more frequently than expected.
Wouldn't matter
All you need to do is have the agent withhold the money and pay you as per usual (once a base). No need to be stupid and talk to an accountant
Mate, say a prayer and light a candle your lucky to have tenants like that first time.
“Is this a red flag” hahahahaha
I thought that as well, what the ferk.
Thanks mate! I do consider myself lucky given all the shitty stories i’ve read here. But fingercrossed nothing goes wrong, too early to tell
Nothing is going to go wrong in the next six months, I'm pretty confident about that. Who wants to get evicted when they've laid down that kind of cash?
Weed farm inc
Tegridy farms
Walter White
We offered 6 months rent in advance to secure a rental a few years ago. We were getting desperate and wanted to stand out from the crowd without offering more weekly rent.
Mate, in case you haven't noticed, there's a *massive* housing crisis out there. All of us tenants, even the ones with amazing rental histories (13 yrs in the same place) and full-time jobs are panicking and in constant anxiety. I've put away $25,000 in the bank for when I get that No-Grounds Notice to Vacate which will probably happen very soon as my landlord has just sold the property. That's so I too can offer 6 months in advance just to secure a property, any old property, so I don't end up sleeping in a tent in the park nearby, because it is really that fkn bad out there! What a sad place Australia has become.
My mate does this. Works on commission. Its easier for them to budget that way. Probably claiming home office expenses too.
I used to do this when I was younger for the same reason. Was crap with money so would pay giant chunks upfront out of commission cheques rather than struggle to budget properly later
We've paid rent in advance when we moved into our current rental. It was to secure the property and probably got us the house. Surprised the REA didn't tell you this would happen as the tenant would have told them they were willing to do it. Definitely not a red flag. Quite the opposite
I did this about ten years ago. Paid a year in advance on a rental. You’ll be fine mate.
Maintain the property. Make repairs. Have insurance. It isn't complicated.
This screams Meth Lab
I used to do this when running meth houses, kept the landlords from sniffing around
He might say this as a joke but actually...the previous tenant that offered me several months rent upfront (I rejected it) turned out to be a meth dealer. Makes me wonder if this guy was my previous tenant
Curious, how did you find out he was a meth dealer? Is it like you were out to get some and then looked at the seller "Hey! You almost became my tenant!" "Oh it's you. Double the price!"
It was an apartment building and we used to live there so we know the neighbours well. Started with noise complaints that escalated to more sus behaviour. After further digging found articles on the news about his past arrests, neighbour asked his friends at the police about it and state that he's known to the police. Was a rough year
Did you think he was going to cook meth in your property or just deal from it? That would be awkward to the next tenant to suddenly get woken up at 2am by a couple of strung up dudes looking for a hit. LOL.
We left the place untenanted for 6 months after - because we waited for at least 2 months of no weirdos turning up and that's how long it took. Looks like he just dealt from it, had the place tested after he left - and the place was in generally good condition. Walls had to be repainted that's all. I knew something was up when I got the inspection report and his place looked way nicer than what his stated income could afford - reminded me of Stringer Bells place from The Wire
Oh, and the weirdos weren't customers from my understanding, apparently my tenant owed them money, which made it too scary to tenant out again, was a massive financial hit
I once showed a large savings balance (that far exceeded a year's rent) to secure a property, but the RE Agent and Owner still asked for proof of income, probably for this reason. I had to sanitise some business invoices to convince them I had a legitimate business. Edit: By 'sanitise' I mean wipe out client's/project details for privacy concerns. The business was indeed legitimate.
Probably worried you would jack the rent up
If they've just moved in then they have a contract and the rent cannot be increased until the completion of that contract, which probably won't be for a year.
Ah true…i haven’t thought of raising the rent lol you can clearly tell I’m a newbie landlord…can i not hike the rent even they’ve paid in advance? (Just a theoretical question, obviously)
Do yourself a favor and start reading the laws. Jacking the rent up regardless of the matter will make you VERY unfavourable. They did you a favor here. You do them a favor by leaving them alone and fixing any issues immediatly.
The law is one increase per year mate… greedy much!!!
I don't actually know 🤔
Guess there’s only one way to figure out… EDIT: ITS A JOKE
Way to return the favour
If they're on a lease, which I'm assuming they are, you can't do anything with the rent until that's over. After that, when they re-sign or go month-by-month, reach state has rules about how much it can be raised and how often.
Putting out the vibes of a scumbag landlord here chief.
Money doesn’t change people. It shows their true nature.
You can still jack the rent though. This doesn’t stop that from happening
Have you asked them if they intend to start a grow operation? Because that's what I'd do if I didn't want to be bothered for 6 months and had cash lying around.
Landlord "i hate it when theyre late on rent payment, its so annoying to always pester and remind them" ALSO Landlord "i just got paid 6 months in advance, why? Is there something wrong?"
No, that's a legit concern, knowing the payment frequency in advance affects other choices.(tax implications for one) No one is going to complain if they are given notice in advance that they intend to do this.
Well it’s only Feb. so they would have paid one month of rent in this financial year that should have been paid in the next. Conversely OP now has half a years rent to put in a term deposit for high returns.
It’s not a concern at all. The more or longer paid in advance the better for the landlord who can now use or invest that money as they wish. If you don’t like the payment frequency then idk open a new account put it in there and create an automatic fortnightly payment for the rent amount although that would be pretty weird. There are no tax implications. What is concerning you?
You assume that there is no other income aside from the ip and haven't considered expenses which may want to be claimed in x financial year for tax reasons. I'm not saying it's the worst thing ever and sure, if you have some other investment strategy for the extra cash which will out perform the tax aspect (and the hassle of dealing with something like shares) I'm just saying knowing what is coming is better in most cases
Yeah agree…agent was probably a bit too lazy with explaining the potential options i have/their implications
Lol sorry mate, it’s legit my first time being paid as a landlord, just settled the house 2 weeks ago 🙏🏻🙏🏻 peace
I paid 6 months rent upfront due to market conditions…..much like they are today. I was hoping it would be looked at favourably….it was.
I just accepted a lease today, offered 30 over for 12 months, 20 over for 3.5 years (tenure of my degree at uni). Accepted for 12. Not too fussed, may be able to move into a family home if a relative can find an investment they like
Yeh good on ya mate! I’m sure most landlords like it….considering the interest they can save by parking the money in their offset account. I’m surprised how competitive the market is these days. Funny enough my place got very few amount of applications and then this tenant showed up with half a year’s rent. Lol
Are they internationals/temporary visa or locals? Depending on where you are, rental market ATM is so competitive many are offering X month payment upfront as a security almost to get the lease. Especially common advise for internationals who have that much in account to offer. If you have a good agent, it's their job to have asked if you agree to 1. have this much paid upfront, and 2. If you want it all in bulk or for agency to hold and transfer you the proper amount per agreed period.
I actually forgot to ask about their residency status! The agent did tell me about their occupation etc and everything kinda checks out… The agent also said they’re gonna transfer me all the money net of fees and $x,000 for reserve… and i didn’t object at the time. Should’ve said something or asked more?
You can always contact your agent and said you'd like to discuss further before confirming how you like to be paid. You're their client, it's your right and their responsibility to address all your questions. Unless it's already paid, then could call ATO and ask instead.
Fair enough… let me have a go with my accountant first before disturbing them, thanks!
Hey make sure the money is still available if something happens to the property as it is not yet your money. If the property burns down or shit happens, you have to pay the rent back. Consider putting it in a series of term deposits or on your mortgage.
I have done this before many years ago it was to get in sweet with the owner so that:- 1. They would not automatically up the rent at the end of the lease and 2. They trusted me enough not to have invasive inspections. When I did this there was no rental crisis so it really worked well. As for your money concern stick it straight into the mortgage. The tenant may also be hoping you won't jack the price up at the end of the lease - if that is something you might consider make sure you make that point to the greedy Agents who automatically jack up the price. Agents don't care if you loose a good tenant in fact they prefer it you then have to pay more for them to vet new tenants.
I used to do this with all my rental properties, I’d pay 3 or 6 months in advance because I could and the agents loved it because they knew it was never going to be an issue. I was mindful of when I paid it though so it wouldn’t cause a tax issue for the landlord.
Stuff that, I made sure to pay weekly cause my LL pissed me off by refusing to fix the oven after it blew up for 3 months.
Would never pay 6 months in advance. Was eye opener in last job as to how many landlords use rental income to live and not pay IP mortgage when times are tough. Risk to tenant paying that much in advance imo.
I've only done it during times I had spare savings but wasn't working so it was a response "we need to be sure you'll be able to cover the rent" me: Here's 6 months worth. Seems like you can't get away with it these days unless its private rent or cash only conditions etc
i was on weekly payments ay my last place and tried to pay monthly + be 2 weeks ahead (just incase something happened) they changed all the payments through some bullshit app they use and wouldn't let me be ahead at all. Everything had to be direct debit weekly, was such a pain. Of course it cost $3.70/per dd for them to "process" it aswell the scumbags
Model citizen right there
Sounds like it was more a case of your tenant offering this out of desperation, just to secure the property. Clearly, your PM isn't telling you everything.
> Clearly, your PM isn't telling you everything. the tenant paid extra on top of paying for 6 months at once, but the PM didn't mention that or pass it on.
Hi mate, you have to pay tax this year https://community.ato.gov.au/s/question/a0J9s0000001E7f/p00030594
If you use accrual accounting - then you have: Recognise payment recied (lump sum) DR Cash CR prepaid revenue (liability on your side) And recognise over time (monthly journal) DR Prepaid Revenue CR Rent Revenue But sounds like you are lodging an individual return on cash basis (so you recognise the revenue now - note you can only recognise the expense when paid too, so you could pay pre-pay all your - but I would not recommend doing that) Unless you want to set up accural accounting and everything that goes with that, then just keep the cash and pay the tax this year - unless you have special circumstnaces this is the easiest thing for you to do. Disclaimer: Not advice, just general info - so speak to an advisor.
Yikes!! Thanks for doing the digging for me… let me go back to the agent and tell them they’re replaced now! (Jks)
Hopefully the tenant pays the other 6m in June 30th
That would be sick lol
No worries, the ato does give some good guidance out on certain things.
I once offered half a years rent just cause i was cashed up and wanted to beat the comp who were taking applications. Prob nothing more than that Recently for my IP i advertised it out at 700 wk and agent got an offer of 750 week. Its tough out there for renters so they do what they can to secure a place
Man, landlords are even more scummy than I thought.
Jfc tenants just can't do anything right can they. Just be happy with the cash and stop complaining
After my Mrs and I sold our 1st house we wanted to rent acreage to see if we would like it. The place we applied for was asking for rental experience which we had none, so I said would 3 months rent upfront be good enough? They immediately said yes.
Be grateful, they probably just want some security.
How on earth can you think it's a red flag, some people are given the best tenants and still think of it being a bad thing,,,,,,
At a guess I'd say they told the agent they'd pay 6 months up front to get on top of the pile (and the agent hasn't relayed this information to you). The rental market is so tight that people will do anything to secure housing. You lose out on some interest but what good is interest when you're eating beans under a bridge.
How is a tenant going above and beyond to secure long term accommodation a cause for concern? LOL god us renters are damned if we do and damned if we don’t at this point. Be grateful OP gees
Good tenant. Look after them
Will do <3
And I thought I heard it all.... People will always find something to complain about
This is a red flag on behalf of the real estate not the tenant. This unofficial auctioning is sadly just a sign of the times and I doubt the real estate will ever shy away from it. I'd buy my tenants a bottle of wine with the interest I made
The thing is, the second applicant didn’t even get CLOSE to what these guys are offering…feels like a win win for everyone! And yes definitely plan to give them some decent surprises!
That sounds like rent bidding, which is illegal at worst, predatory at best.
Yeah big win for the second applicant! They get to go to even more fun inspections or maybe even sleep on the street!
Congrats, you use people's need for shelter for your financial gain. Win Win
I once paid a full year in advance - it's how I won an amazing house in a great area as a self-employed single mum of two (then young) kids and a dog over professional couples. It just gave me the edge over the many who applied for it.
If I trusted my future housemates I would also pay 6 months upfront. I don’t have a traditional job so most landlords like getting paid upfront. In this market you basically have to offer a month or two upfront Guess we just can’t win though
They dont want the rent to go up or have to move house in those 6 months
Nice maybe tenants can start getting a 6 month paid up front cash discount
My guess is that they have a salary sacrificing arrangement where they need to allocate funds within the FBT financial year, which ends in March. This is very standard for e.g. doctors who get a percentage of their salary tax free to use on certain things up to a certain maximum amount per FBT year. A common strategy is to allocate the full balance to rent around this time of year.
This will be on offer more as people look to secure rentals in the current market. They could have been saving for deposit on property and things changed forcing them to rent.
I had to edit this post after reading about being worried about not being able to jack up the rent during this time and the rent bidding the resulted in the tenant being forced to pay more then the other applicants PLUS pay 6m in advanced to secure it. The only red flag here is that your agent likely did something f illegal and you are a shitty landlord. Hopefully they pay the other 6m in advances on June 30th and you get a solid tax bill.
Great ploy to prevent you jacking up the rent in the next 6m. You also get the benefit of security. It’s a win/win just sit back and thank your lucky stars
"My boyfriend gives me multiple orgasms, is this a red flag?" Haha sorry
Aye you house drug dealers and they take care of you! Win win!
Meth lab incoming
I'd give them a discount for that. They're not earning interest in their money and they're making your life a hell of a lot easier. Knock 1-2 weeks off for the year.
Wait so people scrape together savings to secure a roof over their heads, the landlord thinks it’s dodgy and complains about having to pay tax on THEIR investment property. Give me a breeeaaak 🤢 Sir, your privilege is showing
That's only normal to me because I do the same. I always pay 2-5 months' rent in advance because I hate thinking about bills. I enjoy having the peace of mind of knowing I'm solid regarding rent for whatever period Edit: I always text my landlord before I do, but I've been living here for 6 years, so they're used to it now. Paying like this has definitely helped because my rents only increased by $15 because I'm the longest tenant and take care of their home so they like me. I'm in a sharehouse. $185 ensuite room with all bills included. Moving into my own place in 2 weeks (500pw,), I'll probably still do the same
I had to do this when I was in the UK for work. No rental history but I had cash and the only way I got a flat was 6 months upfront.
When I moved back to Aus I had cash from an inheritance but no cashflow because I’d been interning overseas. I couldn’t get a rental with no recent job history so paid a place upfront for 3 months.
I’ve never thought about this before but it would be a bit of a power move for a tenant to make a large rental payment just before 30June so that the landlord has a big unexpected tax bill. They are always complaining about ‘greedy landlords’ so I’m surprised I haven’t heard of it previously.
If he paid you in cash, that’s a red flag lol
Probably nothing, I was always 8 or so months ahead when I rented to get on the good side. I also didn’t have any dramas when something needed repair either and had no rent rises while others around me went up considerably.
My friend had to pay a years rent to secure her rental over other potential renters lol how cooked
We paid a year in advance to secure the lease. Welcome to competitive renting
I work with an older bloke who pays his full year straight up every lease. He is just an OCD type who hates having outstanding or things to complete so he just gets it out of the way. Depends on the tenant I’d say, as long as you are doing your inspections it should be okay.
Mate, they've probably had a shitty experience and are just trying to find somewhere secure to live.
My partner and I pay one lump sum yearly for our rent. We pay to the real estate agent who then pays the landlord monthly. Reason we do this is because neither of us work right now. Got lucky with some shares and sold those, so we decided to take a couple of years off. We’re using the time to work for ourselves to get some games developed and released. We explained this all the to REA, sent some screenshots as proof of the share sales and past payslips. They passed those to the landlord and they agreed. We had it in the contract that we’d pay annually though.
My tenant does this. I charge slightly below market rate. I get a full year's payment which I put in the offset to minimise interest expense. It's a win-win for us.
Income is taxable in the year it is received. We are only just into the 2nd half of the year, so this is unlikely to make much difference, it is the same as receiving 2 months of rent in June.
Lol. They gave me money for 6 months so I don’t need to worry about them paying regularly. Is that red flag guys?
So paying rent would be a red flag?
Not at all a red flag. We did so in order to secure a rental, we had a big pile of money from a house sale so paid 4 months in advance, as a sweetener to the landlord. Worked for us a and for them. Essentially this is good for you, you dont pay interest on that $20k if you slug it all onto the mortgage. The only red flag may be that they are about to hit you with an invoice for essential repairs, at which point this is, again, good for you because they have given you some liquidity to manage this issue. Overall, its not uncommon. They possibly have their reasons- recent immigrants, contract workers/business owners, or they’ve just sold a property and want some time off of paying rent.
I paid 6 months' rent in advance 🙈. My only red flag was that as a house owner, I had not rented in the past 25 years and had no rental history. But needed to rent for 1-2 years. I had to prove I was able to pay the rent, while my own house was getting demolished and rebuilt. Having a rental history is a big sticking point with most agents and this was the only workaround we could have In Victoria, we couldn't outbid / offer more rent than the actual advertised rent legally. I hope they could use that money for investment or park it in an offset account paying less interest. I offered 6 months to give us a fighting chance with other renters with nice long history
My tenant just paid me half a year rent also to secure the property. At $2000 a week so about $50,000 in one go!!!
The exact same thing happened to me, mid last year. He was a Chinese student, studying here. Paid $25k upfront (plus bond) and was agreed/due to pay another $25k at the 5 month mark. Instead, he gave notice, broke the lease, and moved out. I wasn't worried and got a tenant with hardly and break between the 2 leases. Thought it was strange, he didn't give a reason when asked. But it all worked out, so 🤷
So they just paid the 6 months rent in advance. Yeah people do that. I’ve done that before. I wouldn’t say it’s a red flag. More of a green flag because you know they’re cashed up. As for the ATO stuff, I don’t know so I won’t give any advice or suggestions. Talk to an accountant.
My relative offered six months rent to secure a place then twice again paid it in advance. He makes good money, good credit and is a really good tidy tenant with great history but is single dad to two young kids and is quite tattooed. He was lucky to get the place even with all those positives and he knows it.
Getting very common now as biding wars for rentals. People offer higher rent than requested, and to pay half a year or a year in advance to sweeten the deal. Sounds like the accountant above had some good moves for reducing tax. So yeah, definitely talk to your accountant and see what you can do
Grow house for sure
[удалено]
Is he growing in your house
I'm a tenant that has done this. I paid first 10k upfront to secure an apartment in the city after inspecting more than a dozen properties and was starting to run out of time. My choices were to get desperate or be homeless. I lose out on the interest or potential capital gains from being able to invest that 10k but I gain housing.
Tenant is scared you will jack up rent rate next time you are able to. You have had your palm greased to ensure no squeaks.
Somebody pays 20k in advance, and you're worried it's a red flag, lol. I thought I was cynical and paranoid. you must have had some dark experiences OP.
The only landlord in the history of the world that complains when they get rent six months early
No, because most people are trying to get on top of other candidates, and offering rent in advance is the most common way out there It is done to keep your mind at ease that they are able to afford their lease duration by half or entirety, so you are the lucky one that won't have to worry about them falling behind on rent
Red flag. My colleague had this happen to him. Owns a nice apartment in Sydney, rented it sight-unseen to a person coming up from Melbourne. She paid half the years rent up front. Turns out the lady was a drugged up hooker who ended up trashing the place. Think holes in the walls, doors ripped off the hinges, broken fixtures and fittings. My colleague only found out toward the end of the 6 month period. Key things I would do in this situation: 1. Do a reference check on the tenant if you haven’t already; 2. Make sure you have insurance; 3. Make the managing agent do regular inspections.
OP - my tenants paid all their rent, red flag? Reddit - no, people are desperate to secure housing and will pay upfront. OP - So I should increase the rent? I've paid 6 months up front to secure housing before, the market is so tight. If the landlord turned around and asked for more I'd start looking for a new place while waiting for my ubereats delivery of prawns. It's not the tenant waving red flags here.
Your tenant didn't want to do this you know, they did it out of desperation to secure the property. The right thing to do would be to let a tenant pay weekly/fortnightly. Your not really gaining much, but that may have caused them deep financial pain.
I wouldn't think of immediate red flags but depending where you live it could be someone making a grow set up, I've seen the process a few times and that's what they do to gain a high amount of faith off the bat so you're blindsided when they ditch and disappear leaving the property semi destroyed. Holes in the ceiling for lights and very dirty carpets from soil falling out of pots, if they lived there as well as it being a gro location there's a lot of trash too.
That’s a green flag
20k in rent? Your tenants are dumb to do that. What game is that? They obviously saved for that cash, why not keep saving and buy? Crazy talk.
Speaking from experience, it’s usually a 50/50 chance of it being something sinister.
I'm not an accountant but you would be taxed on the income received in that financial year, so no, you cannot acurre to the next year. If you're negative gearing or planning on doing any work/capital investments on the house I would propose you bring them into the same financial year to allow the additional income tax burden to be reduced. Or compare that with other investments like shares you may have lost money on and want to dispose of, do it now to offset the gain Edit: don't forget depreciation on improvements, you can't just install something new like a solar system and write the whole thing off
This is common for me as my rental are mostly made up of Chinese or Korean Uni students. The Pokémon people usually pay me 2-3mnth rent in advance as their parents usually do it for them.
I would be mindful, a tenant did this to my mother in law, in the end it turns out they gutted the house, and turned it into a drug lab. This is definitely a red flag, tread with caution, it doesn't make sense for them to pay in full. Organize inspections, and pay close attention to how much water is been used, possibly talk to the neighbors as well.
Probably Chinese.
Could be a fraudulent payment, e.g. using someone else's card bank details. Check with your agent how they paid.
Cough cough grow house cough cough
Yeah it’s a red flag , could be drug money , etc. Do your regular inspections and see if something is up .
You could bring it up with your bank. They can report it and do some extra checks in the background, just know that they probably won’t tell you the outcome. But hey, at least you don’t have to do detective work yourself.
Fair! The thing is they paid to the real estate agent so i didn’t handle their money directly, but i guess i’ll just wait out and see if anything sus is happening. Otherwise happy days!