Tax Deductions You Didn’t Know You Could Claim From the ATO

It is said that death and taxes are inevitable. One never knows when, where, or how death can strike. But you do know that taxes come back to haunt you at least once every year. One thing that you mustn’t do is evade taxes. But what if you could reduce the tax liability without breaking any rules. The Australian Tax Office (ATO) has detailed rules about tax deductions. While most big-ticket options for tax reduction are well documented, there are many useful rules which not everyone knows about.

Let us look at two such tax refund options which you might not have heard about – one on work-related expenses, and the other on the depreciation of your property.

1. Work-Related Tax Deductions:

Let us first look at the ways your work-related expenses could help you lower your tax. In case you have taken up a course of study which pertains to your current employment, all expenses on it beyond the first $250 can be claimed as deductions. In case you can show that you are doing your office work from home, then the expenses incurred for that can be claimed. Some common examples are stationery, printers, computers, electricity expenses, and even chairs and desks. For some specific jobs, footwear expenses which are specific to their job can also be claimed. If you have subscribed to any magazines or journals related to your line of work, even that can be claimed under tax deductions.

Some of the items on the list above must have surprised you, but we are not done yet. You can claim a total deduction of up to $300 without submitting any proofs, but beyond that, you need to submit evidence. So let us look at some other work-related expenses where you can show receipts and reduce your tax. What about the work clothes you wear? Well, you can claim up to $1 per washing and ironing, provided you can show receipts. If you are paying your mobile phone and internet connectivity bills and have receipts to show, you can add them on if you are using them exclusively for work. The maintenance expenses of the vehicle you use to travel to and from work can also be claimed. The maximum distance allowable is 5000 kms, which means an average travel of 25 kms per day is admissible if you go to the office around 200 days in a year.

2. Property Related Allowances:

When you use a reputable agency like Deppro, they will tell you the small and of course the big expenses you can claim. In terms of assets, the bricks and mortars used in your property can also help you reduce your tax liability. You must remember that the land on which your house is constructed is not considered to be a depreciable asset, so you can’t claim tax depreciation on its value.

The ATO has recently changed its rules regarding claiming of tax depreciation. You need to hire a trustworthy agency who can send a qualified quantity surveyor to your property. The surveyor can make a list of all the assets and accordingly create a property asset list, based on which you can file your tax depreciation returns.

How Depreciation Works for a New Investment Property

The value of everything diminishes over time. This holds true for everything you buy or own. So if you buy a television, then its value will diminish by a certain amount or percentage every year. This is called depreciation. The extent of depreciation depends on the expected life of the television. So if you bought it for $800 and you expect it to function for 4 years, then each year the depreciation is $200. When it comes to buying, owning, and selling real estate, the principle of depreciation works in the same way. The process for claiming depreciation on investment property must be clearly understood to ensure that unnecessary tax is not paid. The tax depreciation investment property rules are different for old (already existing) property and new property. Let us examine the various aspects of depreciation on a new investment property.

Types of Tax Depreciation Investment Property

Depending on which part of the property is being assessed, there could be two categories of assets for which depreciation can be claimed, as per the guidelines of the investment property depreciation schedule ATO. The first is the capital works assets. This refers to the actual structure which is immovable in nature. It includes the cost of the walls and roof of the house as well. These assets are expected to last for much longer. For example, the depreciation of a building is expected to take place over a period of 40 years, so each year the depreciation would be only 2.5%. The second category is referred to as the plant and machinery assets. These are other assets which are added on to the house, and which have much shorter life spans. For example, the curtains, air conditioners, computers etc. would all be calculated as plant and machinery assets. For the calculation of tax depreciation investment property, the ATO has made a detailed list of expected lifespans of all the possible assets in a house.

Ways of calculating depreciation

There are usually two ways in which depreciation can be calculated. We already discussed how depreciation means the gradual reduction of the value of an asset over its service life till it becomes zero. The two ways of calculating depreciation assume different velocities of this reduction of value. The prime cost method assumes that the depreciation takes place in equal amounts every year. On the other hand, the diminishing value method assumes that the drop in value is greater in the first few years and then flattens out.

How to Create a Depreciation Schedule

We have already discussed the two types of assets for calculating depreciation. We also saw the two different ways of calculating depreciation. But beyond these two things, there are other factors that need to be taken into account for calculating a depreciation schedule. Based on this depreciation schedule, the tax write-offs and allowances would be calculated by the ATO. That is why it is very important that the depreciation schedule is perfectly created so that you do not lose out on any allowable deductions, nor do you end up paying extra tax. That is why it is important that you use the services of a good tax consulting agency. A good agency would have your property evaluated by a qualified quantity surveyor, who would list down every small and big asset on your property. Based on the report provided, your tax returns can be accurately filed.

The rules governing existing and new investment properties in Australia are different. If you want to get the best benefits from your tax depreciation investment property, you need to use the services of a dependable tax consulting agency.

Easy Ways to Increase Your Property Value before Selling

Much like the anticipated returns from a company’s stock and income yielded from bonds, you may also anticipate investment returns on real estate. To your surprise, there are various ways to go about increasing the property value. Now learn these ways to improve your real estate property while providing a smooth cash flow:

1. Rental Income & Maintenance:

Properties placed on rental accommodation are known to churn exceedingly well dividend returns. Homeowners and real estate investors have a lot of autonomy and control over the degree of risk to their cash flows.

Although there are circumstances of slow markets and slumps and slacks in property investment, conventionally residential owners lease the property out for several years. During this period they don’t even experience a decrease in the rental amounts as such, you can check this by using an investment property calculator.

2. Increases in Property Value by Appreciation:

Real estate has always known to increase with respect to its property value as the years pass. This is a natural source of increasing the value of your property over time. The fluctuations are very apparent but there can be an expected rate of increase in the value of the real estate.

3. Inflation:

Although the payment of your mortgage is going to remain the same, the level of inflation will work in your favour. It will increase your house’s construction cost while also increasing the rent. The housing demands owing to the unending growth in population also play a part in driving the property value.

4. Use the Equity:

The equity present in your property will increase as you go further in the paying process of your mortgage. Equity is generally decided at the time of final sale, however, seldom, people use this equity for other projects. You can take this up and invest this back in the real estate. Or you can even indulge in the renovation and refurbishing of your property to hike its value and then monitor the hike by using an investment property calculator.

5. Maintenance & Upkeep:

When you receive your monthly rental revenue, you can not only use it for personal purposes but also use it for the upkeep of your investment property. This ensures good cash flow as well increase in property value by means of good care and maintenance. Such initiatives definitely increase the price of your property.

So when you liquidate your property the value will evidently be increased. Upgrades with respect to its interiors infrastructure and functionality can considerably impact the value of it.
Housing trends are constantly on the move so if you want to retain its value in front of investors, you should keep the property interesting.

6. Upgrades:

For a more impactful and considerable increase on the return of your investment, indulge in upgrading your property, Keep track of all the improvements that can create a significant impact and increase your property value. You can even create a property report to view the progress better.

For instance, putting into place energy-efficient equipment or appliances, placing more windows to create natural lighting etc. These things make spaces functional as well as lively. Such an impact can be made by remodelling your washroom or tweaking your master bedroom here and there. Insulating your house can also have a huge impact.

So make a note of these ‘noteworthy’ upgrades while staying in your budget.

Wrapping-up:

As a home-owner or even a real estate investor, it is important to be on the lookout to find ways to increase your property value. Real estate is one of the most lucrative places to invest in. You can even monitor the hike in your property using investment property value.

How a Property Report Can Help You Sell Your Home

Whether you own a car or have installed machinery in your factory, the value reduces every year. This is an economic principle that is applied. It assumes that usage and natural wear and tear will reduce its worth every year. The same holds true for real estate. Your property, whether new or existing, also attracts depreciation on both capital (fixed) works and plant & equipment (removable). A property report lists down the depreciable assets that become applicable every year.

What Is a Depreciation Schedule?

The property depreciation that becomes applicable each year is also eligible for tax allowances of which you can claim. But for that, the property owner needs to know the depreciation amounts each year. Tax depreciation schedules are extremely important as they assist in understanding the correct amount and claim tax benefits accordingly.

Would Depreciation Help Me Save Money?

Let’s say you are not staying in your own property but have rented it out. If you refer to your rental property depreciation report, you can claim accurate tax deductions. This would help to improve your cash flow, and you could use these savings for maintenance expenses on your property. Each of these depreciations would be listed in your property report.

Basic Principles of Calculating Depreciation for a Property Report

If you were to prepare your own depreciation residential rental property report, you would need to know specific calculations. The first is the Prime Cost of your property. If your property is expected to last 20 years, its prime cost depreciation would be 5%. The second calculation is of an asset’s Diminishing Value. This assumes that the wear and tear is greater in the initial years. However, a depreciation report can be quite tricky and touchy, therefore, it is best to rely on professionals who know exactly what they’re doing.

Final Thoughts:

Getting the correct property report would help you claim tax accurately. It would also help you sell it at the right price when needed. It is best to utilise the services of professionals to get an accurate report and get the most out of your report.

Depreciation for Residential Rental Property

More than a year ago, the rules for calculating the rates of depreciation for residential rental property were changed. Only the additional fittings for plant and equipment that are made by the buyer after purchase would attract tax benefits due to depreciation. However, those that were there before purchase would not. Plant and machinery refer to additional fixtures and fittings like curtains, room heating, air conditioning and the like.

How to Comply With ATO Regulations:

The rules governing depreciation for residential rental property are laid down by the Australian Tax Office (ATO) and they change on a regular basis. Whenever a property owner files a tax return, he must ensure that the return has calculations of depreciation on investment property ATO. For this to happen, a complete inventory must be made of all the assets on the property. The list must highlight both capital goods and plant and machinery because both would attract different rates of depreciation. ATO compliance mandates that a registered quantity surveyor is employed to prepare the investment property depreciation schedule ATO.

Calculate Depreciation for Residential Rental Property with the Help of a Consultant:

All of the above requirements can be easily met if your property depreciation reports are prepared by property depreciation consultants. They are well accustomed with the latest ATO guidelines, and these consultants are also aware of the right format in which the property report is to be prepared. This ensures that you do not miss out on any of the tax breaks you are eligible for. You would also devote your time to other important work, leaving all your tax worries to the consultant.

The job of calculating depreciation for residential rental property is not an easy one if you wish to remain ATO compliant. An experienced consultant can make this job easier for you and ensure that it is error free.

Tips for Property Valuation That will Make things Easier for You

It is never easy to buy or sell a property but that shouldn’t deter you. If you want to sell your property and are going for your property valuation, you’ve got to be extremely careful as this might make or break the deal. Mentioned below are a few tips for property valuation that will definitely make things simpler for you and will result in lucrative property investment returns.

1. Clean up:

Make sure your garden is clean, repairs are done, exteriors are painted, furniture is tidy, to ensure your house is in its best shape. Also, for Property Valuation, your kitchen and bathroom play a major role. So, ensure they are tidy and clean.

2. Talk About Hidden Benefits:

A portion of your home’s most helpful highlights may not be quickly self-evident – like new wiring, underfloor heating or insulation. This is why it is essential to be close by when the valuer arrives. Ensure you highlight the important additional items that can improve your homes’ value. Although there will always be depreciation for property, that doesn’t mean you won’t grab a great deal.

3. Paperwork must be Ready:

Assemble a dossier of ongoing board rates notifications or land assesses valuations. These once in a while mirror a property’s fairly estimated worth. However, it can give valuers extra data to work with.

4. Share Your Plans for a Property Valuation:

In case you’re broadening or renegotiating your home credit so as to finish remodels, disclose the proposed undertaking to the valuer, and give a copy of compositional or building designs. The valuer will regularly appoint an ‘as is’ an incentive to your property while the loan specialist may need a thought of the property’s presumably incentive on the fruition of redesigns. This also adds to Property Investment returns.

Investment Property Calculator – Learn About High Return Investments

Investors buy a property for two separate benefits. First, they can rent their property out which ensures regular, steady cash flow. Additionally, they would calculate depreciation over an extended period. This would be done with the help of an investment property calculator. This calculator takes into account the annual depreciation while filing Australian tax returns. But in order to get the best benefits, the calculator must be accurately constructed. The depreciation impacts must be correctly calculated.

Who can Benefit from the Investment Property Calculator?

If you are an investor yourself, now you already know how you can benefit. But, for examples, if you are a real estate professional, you too can pass on the benefits of tax depreciation to your clients. This will help you gain a sense of trust from your clients, which might even lead to repeat business and referrals. But what if you are a regular tax consultant with no relation to real estate? You might still have clients who invest in property. You could use a good investment property calculator. This would help you to do the calculations accurately.

Who Can Help You?

Whether you are a property investor, a tax consultant or a real estate professional, you can be assisted by employing a dependable firm to help you calculate tax depreciation. If you are looking for someone with expertise in Australian property rules, Deppro can help. Deppro will provide you with the services of registered quantity surveyors, who can help create accurate property reports.

Wrapping Up:

With the complexity in tax rules and the frequent updating of regulations, you need expert help. Expert help will ensure that you do not fall foul of the law. You can also get the maximum benefits by submitting the perfect investment property schedule.

What Is a Rental Property Depreciation Schedule?

When you own investment property or rental property, the value decreases every year due to depreciation. But you can also claim tax allowances on the depreciated amounts every year. A rental property depreciation schedule can help you understand the amounts you are eligible to claim on your tax returns every year.

ATO Compliant Depreciation

The Australian Tax Office (ATO) fixes the rates of depreciation applicable for rental and investment property. The rental home returns need to be filed in accordance to these ATO depreciation rates and must be compliant with other ATO guidelines as well. Only an ATO compliant rental property depreciation schedule should be used for filing tax returns. There have been some changes to the tax and depreciation rules in 2017, and the property owner should be aware of what depreciation allowance is permissible on each of the assets on the property. The rules for Capital Works depreciation and Plant and Equipment depreciation as laid down by ATO should be followed.

Get Rental Property Depreciation Schedule from Experts

You can easily make your tax returns compliant by using the services of a reputable and trustworthy company. A Deppro depreciation schedule would be created with the help of registered and knowledgeable quantity surveyors. Each element of your property would be divided into the correct categories and depreciation rates applied accordingly. The quantity surveyor would take accurate measurements of all the construction elements and other assets of the property. Based on those numbers, the annual depreciation would be calculated. A cumulative calculation of subsequent years should also be provided.

If you wish to file accurate tax returns and not miss out on any allowances you are eligible for, you need to first get a rental property depreciation schedule prepared with the help of a registered quantity surveyor.

Tax Deductions – Tips for Individual Real Estate Investors

Planning to invest in the real estate sector? Looking for tips that can help you in tax deductions? Mentioned below are a few tips for Individual Real Estate Investors:

Property Taxes and Insurance:

Any expenses incurred on rentals of Property taxes and insurance are termed as deductions. In the event that you purchased your rental with traditional financing, you are most likely making property regulatory expenses and protection costs on a month to month premise into an escrow account. It’s imperative to acknowledge that the installments into escrow accounts are not really deductible. Rather, you can just deduct property assessments and protection when paid out of escrow. Have a look at the federal tax depreciation schedule for some more tax deduction tips.

Property Depreciation and Tax Deduction:

Devaluation is a yearly conclusion that is conceded to venture land proprietors or proprietors of equipment utilized for business purposes. You may be confused as to why your property deteriorates when in reality the land value increases. While the facts demonstrate that the estimation of the land and the building has verifiably appreciated over time but, you got to think from a micro level as well.

The estimation of your rooftop, for example, diminishes after some time as it decays each passing day. Deterioration tracks the value loss every year. The interesting thing about devaluation is that you don’t need to pay out-of-stash for it every year. Rather, you pay for everything forthright when you purchase the property. Thus, it helps in tax deductions.

Repairs:

Firstly, you will get the full Property depreciation and tax deduction (reserve funds) from the findings in the present year.

Secondly, since the cost is a repair, the cost isn’t a change and deteriorates over various years.

You can save on tax deductions on amortizations, maintenance, education, meals, travel, and home office.

Depreciate Your Property Taxes with Tax Depreciation Services

The value of your property does go down every year. While that is something you might not be particularly chuffed about, you can rejoice in the fact that claiming depreciation on property is the perfect opportunity to recover your losses. This can be done is by setting off those depreciated amounts from the property tax you are supposed to pay.

How to Assess Property Depreciation?

The tax benefits we spoke about at the start would be granted as per the numbers provided by a formal property tax depreciation schedule. This is done by employing the services of a qualified and certified quantity surveyor. The surveyor would visit your property in person and take all necessary measurements of the assets on your property.

Using Property Depreciation for Claiming Depreciation on Property

The quantity surveyor’s report would be part of the overall property depreciation reports. These reports would help in preparing the tax return in such a way that would allow for claiming depreciation on your property. Every asset on the property is usually of two types – it is either a capital works or plant and equipment. Depending on the type, there are different depreciation rates laid down by the ATO.

Conclusion

Do not let your property tax be a burden on you. The depreciation of different elements of your property can easily be used to set off those losses against tax deductions that could reduce your total tax outlay. The property tax could be substantially reduced by claiming depreciation on property. A good agency with certified quantity surveyors like Deppro can help prepare the depreciation report and then use it to prepare the correct tax return which will include the maximum entitlements.