Transcript:
In this training, we’re going to walk through how to model a rental property and its associated income within your client’s plan.
Let’s go to the plus button, where we enter all of our client assets, and select the Property tile again.
Under Asset Type, we’re going to use the dropdown menu and select Rental Property.
This property is jointly owned, so we’ll keep it as co-owned.
We’re going to give this property a name: Rental Property on Main Street.
Next, we’ll enter the market value and purchase value for the property.
Again, this is not a future purchase. This is a property the clients already own.
Let’s also assume this property is located in a rapidly appreciating market, so we’ll slightly increase the growth rate assumption.
I also want to point out that Voyant does support depreciation modeling for rental properties.
If you would like depreciation to be modeled within your client’s plan, you can toggle on the Depreciation Applies option.
If your client has been tracking depreciation, there is inline help available here, including:
- Example scenarios
- Training videos
- And linked support articles
These resources can help you understand how depreciation impacts taxes within the plan.
I’m not going to demonstrate depreciation in today’s training, but I did want you to know that functionality is available.
Under Timing, we’re going to keep this rental property in the plan for the foreseeable future, so we’ll leave those defaults as-is.
Next, we’ll assume there is no debt associated with this property.
However, there are some ongoing maintenance expenses.
Let’s enter annual maintenance expenses of approximately $5,000.
We’ll click Done to save those expenses.
Next, under Linked Income, we’ll enter the rental income associated with the property.
Let’s say the property generates $30,000 annually in rental income.
This income is:
- Not earned income
- But it is taxable income
We’ll click Done to save the income entry.
Then we’ll click Done again to save the property itself.
Now, if we turn on Details, you’ll notice that rental income is now flowing into the plan.
This income appears in pink and is categorized as Other Income.
You can see that in the first year, the plan reflects $30,000 of rental income, and then that income gradually grows at 3% annually over time.
If we go into Year View, you’ll see the rental income reflected within the Cash Flow tab.
Because the property is jointly owned, the rental income is split 50/50 between Judy and Philip.
So, you’ll see:
- $15,000 attributed to Judy
- And $15,000 attributed to Philip
If we move to the Property tab, you’ll now see both:
- Their Main Residence
- And the Rental Property listed within the plan
Since there is no debt associated with the rental property, the property shows as having 100% equity. There is nothing listed for it in the Debts section.
Under Expenses, you’ll also see the maintenance expenses we entered for the property.
If we go back to the Dashboard, the rental property will now appear under the Property section.
Then, if we go to the Assets Chart and turn on the legend, we can see the rental property listed there as well.
You’ll see the property value appreciating over time within the plan.
You can also select Hide All and then isolate just the rental property if you’d like to focus specifically on how that asset grows over time.
I hope this has been helpful.
If you have any questions about rental properties, or anything else while building either a test case or a real client plan, remember that you can always click the name of your client in the top-right corner, select Request Support, enter your question into the text box, and share client access with our support team.
Thanks for listening.