Do You Really Need A Quantity Surveyor?

Every team engaged in construction has different specialists with different skillsets. One of the most important and interesting roles is that of a quantity surveyor. This role combines the knowledge of engineering and finance. People argue whether all construction projects need a project surveyor or not. In our opinion, every project should have one. But there is another area of work where the role of quantity surveyors is even less understood.

Tax Returns and Quantity Surveyors

Australian tax rules state that owners of investment properties should file tax returns. This process requires qualified and experienced tax depreciation surveyors. So, let us properly understand the process of property tax. This way, the importance of quantity surveyors can become clearer as well.

When you own a property, there are two types of additions to that property.

  • The first is capital goods, which indicates the permanent structures.
  • The second refers to the extra items which are removable.

Good tax depreciation quantity surveyors can list all the elements of your property. After this, they distribute them into these two categories.

The Contribution of Tax Surveyor in Filing Tax Returns

The reason we need quantity surveyors for this is not only to create a list. With their training and experience, they would be able to put the correct pricing on each item. They can also calculate the depreciation allowable on each item. This would be according to Australian tax rules. Based on the quantity survey, the quantity surveyor tax depreciation list gets created. It is then made part of the owner’s tax returns. The right work by the quantity surveyor would ensure that tax is not paid when unnecessary. It also ensures nothing important is missed during the filing of returns.

The Importance of a Quantity Surveyor

This was only an example of a specific job that is impossible without a quantity surveyor. If a non-qualified person does it, there could be financial and legal implications. But if we talk about general construction teams as well, we can’t ignore the role of a quantity surveyor.

Conclusion:

The cost and efforts involved with hiring qualified Deppro quantity surveyors might be high but they get repaid because of their contributions. This holds true not only in general construction work. It is especially true in specific jobs like tax returns and depreciation lists. The benefits of hiring a professional quantity surveyor are most usually in financial aspects. But they also help in ensuring that the technical aspects are correct too. If your project team does not have a quantity surveyor yet, it is high time you consider it.

Are You Missing Out On Tax Depreciation Claims?

So many Australians miss out on property tax deduction claims every year. Tax depreciation on property investment is a legitimate deduction which the government allows you to claim. Due to the of lack of information on investment property depreciation rules, tax savings worth thousands of dollars are missed out.

Claiming for a tax deduction on the value of your property seems difficult but with the help of a professional expert, it can become really easy. Claiming depreciation can make a huge difference in a property investor’s cash flow. Despite all of this, it is most often missed.

That is where DEPPRO comes in.

What can be Done to Not Miss Out on Tax Depreciation Claims?

In Australia, only 30% of property investors claim deductions for the depreciating value of their property. It is nothing but a non-cash expense which you can claim every year on your property depreciation. You do not need to spend any cash to make this claim.

You are claiming on the declining value of your building or asset. Of course, there are certain conditions like any other tax deduction. If you have a residential property which was built before 1985, then you can claim depreciation on Division 40, Depreciating Assets only. But if it was built after 1985, then you can claim under Division 40 as well as Division 43.

The Tax Depreciation Schedule

A Quantity Surveyor is an official who is professionally qualified to produce a legal tax depreciation schedule by the ATO. It includes the following two divisions:

  1. Division 40: Depreciating Assets: This element of property depreciation schedule is all about assets like plant and equipment, lights, fans, carpets, floating floorboards, smoke alarms, air conditioners, refrigerators and so on. Every item which has a diminishing life is included in this. The tax deduction calculation, according to the investment property depreciation schedule ATO, is carried out based on the effective life of the items.
  2. Division 43: Capital Works Allowance: The immovable parts of the structure like the building, walls, roof, swimming pool, built-in furniture, toilets etc. are a part of this division. The investment property depreciation rules state that this capital works allowance is calculated on the basis of the construction cost of the building and not the current purchasing price. So if you are buying a property, you can claim a deduction based on the original construction cost while the building was made.

How Can DEPPRO Help You?

We have been in the industry for more than 12 years now and have a passion for tax saving. Our team has industry-leading skills and can assist in all areas of investment property taxations. We are always updated and are well-versed with all the latest Australian Taxation Office (ATO) rulings, investment property depreciation rules, and interpretations for our clients.

The property depreciation schedule made by us ensures that our clients get maximum tax benefits and at the same time it complies with all the latest ATO regulations. If you have the property of your own and make money owning it, get a qualified surveyor immediately to perform a tax depreciation schedule. We have offices all over Australia. Contact the one nearest to you today!

Is it Worth Obtaining a Quantity Surveyor Report?

Have you invested in a rental property in Australia which was built in a year preceding 1987? If so, then things might be different for you than for those who bought their property in the following years. You may be confused in regards to getting a tax depreciation report from one of the qualified tax depreciation surveyors in your city.

Is obtaining a quantity surveyor’s report worth the effort, time and money? Read on to find out.

What Does a Depreciation Schedule Involve?

A quantity surveyor is a dedicated professional who works on depreciation schedules and the capital allowance of investors. When they complete both, it includes two essential elements: equipment depreciation and capital work deductions.

What Is Capital Works Deduction and Why Is It Important?

Capital works deduction is a form of tax deduction which relates to the structural aspects of a building. These include irremovable or fixed assets like tiles, doors, sinks, windows, walls, roof, etc.

Because it is next to impossible to remove these assets, capital works deduction, in the tax depreciation reports, assumes its importance. This prevents an investor from feeling the pinch on their finances at the subsequent stages.

Is there any Hard-and-Fast-Rule Related to Quantity Surveyors which one Needs to keep in Mind?

For the successful generation of these reports, it is imperative that tax depreciation quantity surveyors, who undertake the responsibility, are registered tax agents. This is all the more important in view of the fact that the information in the document relates to particular tax advice.

How Getting A Quantity Surveyor’s Report Helps?

According to the current version of tax legislation in Australia, any residential or commercial property built before September 15, 1987, and July 20, 1982, respectively, are not eligible for deduction.

As a result, an investor may not even consider the need to obtain a surveyor’s report if their date of purchase of property does not make them eligible for it.

However, it is a good idea to enquire about the possibility for a deduction, even if the property in question is 100 hundred years old. Owners of old properties carry out renovations more often than not, and this makes an investor eligible to make depreciation claims after its purchase.

A new buyer can file a claim for it in the event the previous owner carries out any repair or renovations on it after the aforementioned dates for residential and commercial properties.

So, as you would have come to know, getting a depreciation report is your best bet to make a claim for it in a timely manner.

Whether it is ATO guidelines or other tax depreciation laws in Australia, things keep changing from time to time. Therefore, it is a good idea to get in touch with depreciation service firms such as Deppro Perth. While you may spend a little in terms of fees, the dividends it may pay can make it worth the investment.

How is Depreciation Applied Following Natural Disasters?

Natural disasters are one of the leading causes of damage to properties. Situations involving such disasters often necessitate owners to substitute various assets. At times, depending on the degree of damage, they may also feel the need to rebuild their properties.

Though it can be a challenging task for both owners and tenants alike to deal with such a situation, there are ways to mend it. As it can be expensive, owners consider linking it to tax depreciation schedules. If you do not know much about depreciation, here are the things you need to know to maintain depreciation deductions for damaged properties:

Assessment and Depreciation of Disaster-Stricken Properties:

According to Australian tax rules, it is important on the part of an owner to submit a report on a damaged property to claim the expenses. Regardless of whether you repair, replace or improve an asset, you need to submit the property report to the concerned authorities.

Furthermore, the consequences may differ slightly, based on whether the property in question is an insured property or an uninsured one. Depending on whether or not the inspection of a property has been done, there can be two set of possibilities for an owner which are as follows:

A Quantity Surveyor Has Inspected the Property:

In this scenario, the owner can make adjustments to the original report and apply it without spending a huge amount of money. This also saves a lot of time and hassle.

A Quantity Surveyor Has Not Inspected the Property:

This can be a little tricky to handle. In this case, a property owner needs to contact a quantity surveyor for a thorough inspection of the property as soon as possible. The rationale behind it is to prepare a property report in a timely manner. When one fails to complete this quickly, it can land one into various complicated circumstances.

If you repair an asset, you can claim the deduction of the expense for it, irrespective of whether you have insured your property. The capital allowance values and the individual depreciable asset will need adjustments for the replacement of insured properties. For uninsured properties, the residual value of the replaced asset will cease to exist and forecasting of depreciation of new asset will follow.

What Should An Owner Do to Get the Right Depreciation Rate for Their Property?

The extent of ATO depreciation rates varies from case to case, depending on the kind of damage from a natural disaster.
In order to understand the ATO guidelines, it is important to gain an in-depth knowledge of various aspects related to filing the Australian tax return. You need to reach out to an expert for information about the scope of maximizing the future, present of previous depreciation claims.

Conclusion:

The preparation of the property report according to the ATO guidelines is your best bet to claim the depreciation expenses in your tax return with success. Unless you are an expert in this field, you should avoid taking it on your own. It makes a lot of sense to assign the task to a qualified professional with years of experience in this connection. This will help you to be on the safe side and prevent the possibility of getting into any legal issue.

Tax Considerations When Investing in Australian Properties as an Expat

Investors invest in Australian property for a number of reasons. Among the other advantages, such as the location and stable investment options, tax advantages constitute one of the primary reasons for the decision.

That said, there is a different set of tax laws for Aussies who live overseas. Does it make it a less attractive option to invest in the properties in Australia? Certainly not, if you make some fundamental considerations before proceeding with your investment decisions. Read on further to find out more about these tax considerations.

Key Tax Considerations for Non-Resident Aussies before Investing In Australian Property

  1. Tax Deductions: If you rent out your newly purchased property in Australia, you can claim tax deductions relating to the costs of maintaining it. This includes both cash and non-cash deductions.
  2. Depreciation: In layman’s terms, tax depreciation is a form of tax deduction which is concerned with the reduction in the renovation and improvements of rental property. You can claim it on your tax filings in connection with your income. It considers the fact that certain improvements such as carpets, kitchen cupboards and curtains that you make to your property on rent are likely to diminish in value over time. This generally happens due to wear and tear.
  3. Negative Gearing: Negative gearing refers to a kind of financial leverage wherein an investor borrows a certain amount of money with the objective of owning a piece of property to generate income. Normally, the piece of property in question is greater in value than the income which is likely to trickle into the wallet of an investor due to the investment.

If you are seeking ideas about claiming depreciation on investment property based on negative gearing, you can use this concept to cut down your losses with respect to your other income sources. This will help you to minimize your overall tax liability and taxable income in a year. Whether you are a native or non-resident Australian, you are entitled to receiving the benefits of negative gearing to reduce your losses.

  1. Capital Gains Tax: Sometimes the value of a property may hit the upward trajectory owing to various reasons. If an investor holds a piece of property for at least twelve months and decides to sell it thereafter, they become eligible to claim the capital gains tax. It involves one’s marginal income tax rate and provides a tax discount on 50% of capital gains to Australian residents. Unfortunately, if you are not an Australian resident you do not receive the benefits unless you qualify for it by meeting certain tax laws.

Conclusion:

When it comes to dealing with Australian tax laws, the wise thing to do is get in touch with an expert from a reputable depreciation service firm such as Deppro. Irrespective of whether you are a resident or non-resident, do not forget to consult the experts from a reputed firm before filing your depreciation claim to be on the safe side. They can be the real guardian angels for you when you are in a state of a fix.

Can My Accountant Do The Tax Depreciation Report For My Rental?

Accountants are not just tax savers but you can also call them real saviors who can churn out your taxes in the right way to save your hard-earned money. But while calculating your property depreciation costs you might wonder “Can my accountant do the tax depreciation report for my rental?” Well, this can be taken as one of the contentious issues as accountants are not qualified enough to prepare tax depreciation reports.

A tax depreciation report necessitates a greater degree of consideration than the calculation of the costs involved in materials and construction labor. Accountants are not qualified enough to carry out the construction estimate costs on their own. Additionally, if accountants claim to do the property depreciation schedule, they end up in confusion which may amount to massive financial losses. Read on to find out the reasons why an accountant is unable to carry out property valuation.

Reasons why an accountant is unable to prepare tax depreciation report:

  • Accountants are not equipped to determine building expenses, which covers more than only materials & building labor.
  • Auditors are not equipped to evaluate building works & associated expenses of past works covering the life of the rental or property.
  • Depreciation demanded by auditors without the application of a professionally qualified tax depreciation schedule is considerably more traditional & result in thousands of dollars in wasted reductions for the investor.
  • Quantity surveyors require to prepare a report in advance in order to allow auditors to carry out the tax depreciation report with the help of an investment property calculator. As accountants have no idea about quantity surveying they cannot effectively do the report if there is no quantity surveyor. Thus, it can be said that it is the quantity surveyors who are qualified enough to do the tax depreciation report. Without the help of a quantity estimator, it is almost impossible for an accountant to carry out the tax report for your rental property.
  • Construction costing and building skills are extremely essential for preparing a tax depreciation report. Without the proper knowledge of construction, one cannot manage to prepare a property depreciation report.

Thus, all your confusion ends here as now you know why an accountant is unable to prepare a tax depreciation report. In order to carry out a tax report, the knowledge of construction and building planning is an essential factor. One cannot be an accountant and a civil engineer at the same time as everyone has their own cup of tea to drink.

Conclusion:

In order to carry out tax reports for your rental property, you need to hire a property valuer with a sound knowledge of construction and quantity surveying. Quantity surveyors and valuers are well-equipped to carry out and determine tax reports for a rental property which an accountant is unable to do. Therefore, you should consider hiring a valuer and a quantity estimator to carry out your tax depreciation reports for your rental property.

Repairs, Maintenance Vs Capital Improvements

Before delving too heavily into this, first, you need to understand the basic meaning of repairs and improvements. So, what can be considered as a repair and what can be considered as an improvement? Improvements can add value to your property, making it more beneficial and fruitful for you in the long run. Basically, it will increase your profit at the end of the year. While repairs are needed to maintain the health of any asset or property, it will keep the asset in good and working condition for a short span of time. We would recommend discussing tax depreciation schedules with a professional and qualified accountant for this purpose.

Understanding Improvements:

The improvements may include:

  • adding assets or anything that adds value to your present property
  • upgrading to a new technology
  • adapting something to a new trend or technique
  • restoration of some aspect of a property

There can be some examples of improvements like installing a security system, an air conditioner, a heater, renovating your kitchen, replacing tiles, replacing the entire roof and much more. Improvements always add to the profit, therefore, you cannot deduct the cost of improvements in the current year. You have to keep track of the expenses and plan a tax depreciation schedule so that at the time of selling your property, you can get tax benefits from it.

For example, if your property’s current value is $200,000 and 20 years later you want to sell it for $400,000, but you have made improvements costing $50,000 then you need not pay tax on $200,000, rather you will pay tax on the amount $150,000.

Understanding Repairs:

Repairs are done in order to keep things moving and keep them in a healthy state. They are not meant to add value to your property, but they will bring the asset back to its original condition. They can only add short-term value to your assets. There is tax depreciation on repairs and maintenance that you do on your assets. Depreciation basically involves all the costs and expenses incurred to keep a property in a well-managed condition. Every expense can be related as a property depreciation tax deduction.

Some examples of repairs include:

  • repairing window glass
  • cleaning air ducts and vents
  • replacing electrodes in water heaters
  • replacing sewer pipes

Repairs can be deducted in the current year as they only aid in keeping your asset in operating condition, not causing longevity or prolong the useful life of the property. An example of a repair would be changing the oil in your bike. This will keep your bike in good condition, however not necessarily increase its life.

You are expected to perform repairs more than twice in a period of 10 years to maintain a working condition of your asset. These tax deductions are possible only when you are not using the property as your personal residence. You can file repair expenses only when you are using the property in your business or you are renting it. You can get more information and depreciation reports for your investments on Deppro.

How Common Property Assets Can Supercharge Your Upfront Deductions

It is pertinent that investors are aware of all of their entitlements. One of such is an entitlement to claim against a unit you own in the ambit of a complex. You can make this claim premised upon your share of the ownership.

This yield on investment property is most commonly denoted in form of a unit entitlement.

It is usually reflected on the strata plan of the owner or upon the plans of subdivision. You can measure this entitlement to claim per lot and then a summation of all the lots.

Unit Entitlement: Explained

Let’s understand this by analysing an example. So let’s assume that unit entitlement of a person is (say) 60 and the aggregate of all the lost come down to 800. Then, by this, we can deduce that the person has a 7.5% claim over the commonly owned assets.

In a typical example, per unit claim gets smaller in case there are larger developments involved. However, this small percentage can contribute considerably to the claim. That’s how Deppro Perth works. The two basic and very common headings under depreciation are the structure of the building and the assets of the plant.

Importance of Common Area Deductions in the Depreciation Schedule

Undeniable claims can be derived through the construction value of common areas when looking at the structure of the building alone. Building tax depreciation can be filed for returns. For instance, if one particular unit of your property has a construction cost of approximately $100,000, but the additional detailing done to it like pools, floors, gyms etc. can add up to thousands or even millions of dollars.

The real impact of the common area deductions can be traced on the assets mainly associated with plants and equipment. Numerous assets are usually left unnoticed such as fire alarms, fans used for ventilation, carpets, lifts, etc. All these carry huge investment amounts which can be tax deductible.

Even an air conditioning plant that holds a value of millions of dollars will give out a single unit entitlement of a couple of thousand dollars to the investor because of the deduction that occurred across years. Thus, an asset like air conditioners which carry high investment amounts is not actually which would provide you with considerable deduction. But, numerous other assets and equipment do promise complete depreciable value return to the investor annually.

How does it work?

This happens in a very logical manner. The assets or equipment which are of less than $301 and aren’t a member of any particular set, can be written off completely. An example of this can be taken of the door stoppers. Collectively when seen, the stoppers can cost over $25,000 but when the share of an individual investor is calculated, it’ll hardly reach up to $100. Other than this, some other common assets which are commonly used by the investors and thus fall under the category include motors, assets used for barbecue, fire extinguishers, sprinklers, treadmills, swimming pools, and their accessories etc. All of them are deductible immediately and can give you remarkably reduced taxable property.

Conclusion:

ATO property depreciation reduction can be experienced to a great extent by the common property. This is the major reason why units help you extract more deductions than houses generally. A fact to pay attention to is where the deduction is in the schedule. A large number of assets have a tendency of giving the deductions within the birth year of the ownership of the unit. This allows the investor to grab the advantage of improving his/her cash flow statements. Thus, a significant charge can be experienced in the upfront deductions of your common assets and their depreciation.

4 Facts every Property Investor Needs to know about Claiming Depreciation on their Rental Property

When it comes to depreciation schedules for your rental property, it is quite important to know all the necessary facts included within the same. Given below are four important facts to understand tax depreciation:

Fact 1: Depreciation is known to be the largest set of deduction, which is available for any property investor

To start off with the first fact, it is really important to know that tax depreciation is known as one of the largest set of deductions. Depreciation lies within the range of $2,500 – $5,000 for the existing house whereas the brand new one averages around $10,000 – $13,000 per unit. It is typically done for the first complete year for standardised residential houses or properties.

Let’s Take an Example to Understand Deppro Tax Depreciation

John, a senior officer of the IT department happens to purchase a unit in his city to make his first investment. That very unit was built around 10 years ago, as a matter of fact John bought it for around $540,000 in the month of April 2017. The yearly income of John is $75,000.

Every year John’s unit goes through the aging process, along with all the other common areas that go in the unit development. As John bought and rented his very property before the 9th of May, 2017, he can raise a claim for the act of depreciation of his building. In addition to that, he can also raise a claim of Deppro tax depreciation for the entire assets included, as a matter of tax deduction.

Fact 2: New properties happen to generate better depreciation deductions for all the investors

When investors purchase brand new properties for investment purposes, it ends up generating greater depreciation deductions. It can be the very case for two vital reasons:

When it comes to constructing today’s properties, it costs an individual more than it was back in the day. A very important way to calculate depreciation is by calculating a mere percentage of the whole construction cost that will be deducted each year. When all the equipment and plant assets are new, it initially ensures that they are eligible enough for the annual depreciation deductions.

Fact 3: It is been said that 90% of properties that are old qualify for deductions in the shape of depreciation

It is quite vital to understand that new properties happen to generate one of the best depreciation deductions, which many of the investors fail to realise. To understand it in a much easier way is when a property is built 40 years ago, it is understood that there will not be any value left in order to depreciate and later claim.

If one specific property was bought before the 9th of May 2017, the assets that come within that very property will also qualify or be eligible for depreciation deductions.

Fact 4: Benefits of tax depreciation, when claimed, outweigh the impact made on CGT

Some of the investors are only concerned about the claiming of depreciation now, and on the contrary think that they are only increasing their Capital Gains Tax, which will be made payable if they happen to sell off their property.

Having said in the tax depreciation report, that only the depreciation, which is claimed for Buildings and Structures are deducted from the cost of your base. The Deppro tax depreciation cannot be claimed on Division 40 – assets such as stove, hot water system, blinds, and air conditioner.

Properties rented or bought after 7.30pm in the month of May 2017 do not make annual claims for the act tax depreciation report of depreciation on Division 40 assets present in their property. However, when the property gets sold out, the value accumulated on that depreciation is claimable as the expense, which further goes on to reduce profit on its sale as well as the potential payable CGT.

Know the Status of Depreciation Deductions on your Property

Mentioned above are some of the most important facts that investors need to keep in mind before claiming depreciation on their rental property. An easy way to do so would be to use Deppro tax depreciation for further assistance.

How to Maximise Depreciation for Investment Property

One can consider depreciation of a property as a simple deduction on the actual worth owing to the ageing and wear and tear of the property that one owns. It can be termed as the deduction that results out of overtime assets. When it comes to investment, even the most experienced investor tends to overlook the benefits of a depreciation report. While there are accountants for a majority of tasks related to the calculation of taxes, there is hardly anyone who pays attention to depreciation schedule for investment property.

Property Tax Depreciation

The value of a building goes down as it gets older. This is because, in the majority of cases, such buildings show the signs of wear and tear. According to Australian Taxation laws, and the Australian Taxation Office (ATO) in particular, a property owner can claim depreciation if they generate income from their property.

Tips for Property Tax Depreciation

While your accountant can take care of all the aspects related to your business, they are likely to miss out on a depreciation schedule for investment property. After all, it is a payment which the administration owes to you. Though all accountants never overlook the matter, a majority of them prefer to have it handy while preparing your tax return. So, it is a good idea to reach out to a quantity surveyor for an assessment of your property.

Do Older Properties Offer a Good Depreciation Value?

Contrary to the notion that older properties have no depreciation value, the truth is that every property has some sort of depreciation value if it is used by its owner to generate some kind of income. Though the depreciation of a new property is much more compared to an older one, the latter can also carry a greater value than by virtue of updates and renovations.

Why Attach Importance to Tax Depreciation for Your Property?

On an average, about 80% of investors do not mind promoting the depreciation deductions. If you happen to be one of them, it is high time you made efforts to maximise it as far as possible. What’s more, the ATO has a provision wherein it allows taxpayers to go back to two previous tax returns and amend them to claim deductions. So, if you haven’t been claiming depreciation on your property, utilise it to your fullest advantage.

What to Remember for a Higher Yield on Investment Property?

An important thing to remember in connection with depreciation is that a majority of homeowners forget to take renovation into account while filing their tax returns. With every renovation, there is also the possibility of the existing assets being replaced by something new. And this makes for a cogent reason to qualify for depreciation. The ATO provides for claiming the remnant of value for depreciation in such cases.

Never miss the opportunity of having a quantity surveyor inspect your property in accordance with investment property depreciation rules. Make sure that they document each and everything as the ATO is likely to take their report into account. Once the renovation is done, ensure that the same surveyor takes a look at the property and notes down the details of it to determine the assets that have been removed or replaced.

Final Thoughts:

As a standard rule, remember to only get in an experienced quantity surveyor when you plan to get your depreciation schedule done. While there are other low-cost DIY options that you can explore as well, you may eventually end up spending more. Furthermore, the remuneration of a quantity surveyor, even as it proves to be more than that of your liking, is 100% tax deductible. Thus, even if you pay them a higher fee, it wouldn’t hurt you as you would get it back.