Mistakes are part of life, but you’ll be kicking yourself if they lose you money. Make sure you avoid the ones below.
Rent at mates rates
It’s natural to want to help your mates out; it’s what friends do. But there are some situations where mates rates should not apply, and that includes property. The reason investors get into the property market is because they want to make an income. Friends can certainly live in properties you own, but be firm when you say they must pay rent. You’re running a business, not a charity.
Don’t attempt this unless you’re a quantity surveyor. These people work out costings for building projects and have a high level of education. They’re part of an official body (Australian Institution of Quantity Surveyors) that ensures members are aware of the latest industry standards and participate in the training required to keep up their skillset.
Long story short; unless you have a Bachelor of Urban Development (Honours) (Quantity Surveying and Cost Engineering), leave it to the experts. Book an appointment here to get a qualified surveyor in for a visit.
Saying ‘that’s not worth anything’
Just because some of the properties have a few decades on them doesn’t mean they aren’t worthless. Some capital works are still eligible for deductions.
Items that are worth $300 or less are eligible for immediate deduction; think the rubbish bins, smoke alarms, children’s play equipment and the curtains. Other overlooked deductions include spa baths, bathroom and kitchen appliances and even the swimming pool are items that can be claimed on a tax depreciation schedule.
Putting it in the wrong category
Yes, this is one of the dangers of DIY depreciation. In the schedules that quantity surveyors create, there’s two categories; capital works and plant and equipment. They’re also known as Divisions 43 and 40, respectively.
Capital works include items that are built into the property itself; wiring, driveways, fences and some landscaping. Plant and equipment include things you can easily remove from the property such as furniture and carpeting. If you own a commercial property the desks, blinds and shelves can be claimed. You can find out more about deductions on the ATO website.
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