Coding management fees and repairs paid from your rent
Your property manager takes their fees and pays your tradespeople straight out of the rent. It's convenient, and it makes the books fiddly. Each deduction needs the right account, and a repair can easily be counted twice.
What comes out of the rent
A statement usually holds a few kinds of deduction. There's the management fee, often a percentage of the rent. There may be a letting fee when a new tenant moves in, inspection fees, and the cost of repairs the manager arranged for you.
Most landlords give each kind its own account. Management and letting fees go one place and repairs and maintenance another, so you can see what the manager costs you, separately from what the property costs to keep up.
Fees on a statement normally include GST. Whether you can claim that GST back depends on whether you're registered for it, which is a question for your accountant. What matters for coding is that the GST is recorded properly so it isn't treated as part of the cost by mistake.
The trap is repairs. Your plumber may send you an invoice, and your manager also pays them from the rent. Both show up. If you record both, the repair is in your books twice.
Mistakes to avoid
- Using one account for everything. You can't see what your manager costs you.
- Treating GST as part of the cost when it isn't, or the other way round.
- Forgetting fees that aren't monthly, such as a letting fee when a tenancy starts.
- Coding a big job as a repair when it was an improvement.
- Coding by supplier name only. The same tradesperson can send a repair one month and a new fitting the next.
This page is general information, not tax or accounting advice. Check your own situation with your accountant.
A worked example
Here's a month's deductions from one statement. The figures are made up, to show the shape.
| Deduction | Amount (with GST) | Account |
|---|---|---|
| Management fee, 8% of $2,600 rent plus GST | $239.20 | Property management fees |
| Inspection fee | $57.50 | Property management fees |
| Plumber, leaking tap | $345.00 | Repairs and maintenance |
| Total taken from the rent | $641.70 | Rent $2,600.00 less $641.70 leaves $1,958.30 paid to you |
Notice that the management fee is a percentage of the rent, with GST on top. Rent can change, so the fee changes with it. A fee that doesn't fit the rent is a sign something's wrong.
A fixed fee, such as an inspection, stays the same each time. Patterns like these are why a rule that remembers how you coded a line catches mistakes as well as saving time.
How Zerocile handles it
Zerocile codes each deduction to the account you've chosen for that kind of line, and remembers your answer. A regular tradesperson can have a rule of their own, so even their discounts and sundries are coded the same way each time.
It handles GST-registered and unregistered organisations differently. An unregistered organisation only uses tax types that carry no GST, so the GST on a fee isn't claimed by mistake.
For the double-counting trap, an invoice for a property your manager looks after waits for the statement line that pays it. The cost is posted once, from the statement. If you paid a bill yourself, you can say so and it's posted as a bill instead. When a repair does turn up twice, Zerocile flags it before it lands in your books.
Questions
Should management fees and repairs use the same account?
Usually not. Keeping them separate lets you see what your manager costs you apart from what the property costs to maintain. Your accountant can say what suits you.
Can I claim back the GST on fees?
That depends on whether you're registered for GST, so ask your accountant. Zerocile works with both registered and unregistered organisations.
What if the tradesperson also sends me an invoice?
If your manager paid it, the invoice waits for the statement line and the cost is posted once. If you paid it yourself, say so and it's posted as a bill.
What's the difference between a repair and an improvement?
That affects how a cost is treated for tax, so it's a question for your accountant. Zerocile codes what you tell it to and remembers your answer.
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