Bought an investment property late this financial year? Make it count, claim your deductions!

It doesn’t matter when you bought an investment property. You may have thought about buying the property a few weeks back before the financial year ends. But, in this case, it’s worth opting for tax depreciation schedules. While such schedules last for a longer period of time, these include the prime cost method apart from the diminishing value method. The report will give you the details of how much the investor can claim the tax depreciation. So, let’s take a look at how you claim the deductions in the financial year.

About cost write-offs

Now, let’s say, you own a property for only three months or days as on June 30. In this case, you can claim for an immediate write-off, pro-rate of building, and low-cost assets. But, if the building is 25 years old, then you can only claim a deduction of up to 2.5% ever year. While the deduction is on the original cost of the property, you can claim it up to 40 years. In case you don’t know the building cost, then you can approach a quantity surveyor. Apart from helping you with the cost, he would also able to assist you with the depreciation schedule.

But, regardless of what it might be, investors can foresee the best capital growth prospects in the years ahead. According to the property report, Melbourne, Brisbane, and Sydney are some of the locations where there’s a potential for growth.

About immediate write-off assets

Under immediate write-off assets, you can claim only for things that cost not more than $300. These include door closers, exhaust fans, smoke alarms, and other things you may not use often at the property. Additionally, if the price of the brand-new asset lies between $300 and $1000, then you can expect a depreciation of 18.75% for the first year. This deduction is done based on the original value of the asset. Under the category, you can expect the depreciation on ceiling fans, range hoods, garage door motors, and any other things.

 

When it’s time to change the infrastructure, this is the best time to buy any new items for the property. Moreover, after you install the item, you can claim the depreciation in the year’s Australian tax return. However, many individuals and accountants are unaware of how to claim the deduction. Hence, when you purchase the investment property, you should check for the depreciation deductions for the financial year.

Conclusion:

If the property is undergoing construction work, then think about buying it before June 30. If you buy the property beyond the date, then you may have to wait for a year to claim the deductions. Way ahead, once you purchase the property before the specified date, then you would able to recover some cost through savings. The savings refers to the amount you will make from depreciation. But, if you are planning to purchase a property, then you can seek a quote. This would give you a fair idea about whether you would improve the tax returns. For any queries, you could contact a team dealing in Capital Claims Tax Depreciation. You could also contact experts to get the details of depreciation residential rental property.

Never Miss These 6 Commonly Overlooked Tax Deductions

Building owners often neglect some of the most recent ATO tax deductions available to them. If you desire to minimize your tax this financial year you must never leave them from the list.  The ATO has permitted owners of income-generating properties to claim ATO property depreciation deductions. An individual may claim depreciation under two categories namely capital works and plant & equipment assets. These depreciation claims can significantly help the building owners in reducing their tax liability and they will pay less tax. The ideal way to make sure that you enhance your depreciation claim is to prepare a tax depreciation schedule.

Here are some of the most ignored tax deductions:

1. Borrowing expenditures:

When you buy your investment property first the borrowing expenditures included can be claimed as tax deductions. These expenditures may include title search fees, mortgage documents costs, loan establishment expenses, etc. If your entire borrowing expenditure exceeds $100 or less, you can claim a complete deduction in the income year they are incurred.

2. Property management fees:

If you procure a real estate to handle your investment property, you may need to pay property management fees. It is worth noting that these fees remain tax-deductible and you may claim them in your yearly tax return.  If you face any difficulty in carrying out your property valuation to seek a depreciation claim, you may hire an expert for the job.

3. Legal expenditures:

ATO has specified that legal expenditures incurred while buying or selling your property are not tax-deductible. However, an investor is eligible to claim any expenditure faced while evicting a non-paying tenant.  You need to take court action due to loss of rental income or seek damages claims for harm caused by a third party on rental property.

4. Insurance:

When you claim rental income on your investment property, your insurance will also become tax-deductible. The insurances that remain tax-deductible may include private mortgage insurance, building, or content. You may engage an expert quantity surveyor to complete an ATO tax depreciation schedule.

5. Advertising expenses:

You will be allowed to claim a real estate tax deduction for the advertising expenditures. However, it will be possible if you are an agent or property manager who earns a commission and have yet to be reimbursed. It may include expenditures linked with advertising via newspapers, drops, bunting, etc.

6. Home office expenditures:

If you are working from your home, you will be allowed to claim occupancy cost as a tax deduction. It will also include expenditures of using your own computer, equipment, lighting, heating, and software, among others. But, you will not be able to get complete the main residence exemption in case your house is your main place of business.

Conclusion:

Whenever you prepare your tax depreciation report, don’t forget to include the above expenditures. It will help in lessening your tax liability in every financial year. If you face any difficulty in preparing your tax depreciation report, you may get in touch with expert Deppro quantity surveyors. The professional quantity surveyors will prepare a schedule that will cover all deductions available throughout the lifetime of the property. It will ensure that your cash flow is maximized and remain fully tax-deductible.

Why Units and Apartments Generate Great Depreciation Deductions for Investor Owners

Depreciation in real estate is one of the most common and crucial tools for rental property owners. This gives way to deduct down the costs included in buying and property improvement measures. This, in total, tends to turn quite useful in life, lowering down the taxable income of the individual in the concerning process. Property investment returns are the biggest concern of individual’s planning an investment in the real estate sector.

However, tax deductions are highly dependent on the depreciation deductions concerning any property. Investor owners willing to invest in real estate units and apartments often tend to fear the great depreciation deductions associated, herein.

Key Features Concerning Depreciation Deduction

  • Depreciation is used by property owners for deduction of the costs involved in buying and improvement of the property.
  • As soon as the units or apartments are put in service, depreciation begins.
  • Most of the units or apartments start depreciating at a particular rate over the concerned period of time.
  • However, it is very important to understand the fact that the depreciation only concerns the building value and not the land.

Investing in Apartments in Australia

Most of the Australian investors choose apartments and unit developments options as the prime part of their planned property portfolio.

The main reason behind the same is both, the probable estimate tax returns and less investment.

However, some of the major reasons for the same can be listed as follows:

  • Lesser purchase cost
  • Lesser maintenance on an ongoing state
  • Favourable return in terms of rental yield
  • Very attractive for the tenants as it accords favourable affordability, lesser maintenance, and nearby central locations.

Apartments and Units and Their Depreciation Deductions

  • Similar to all other properties, there is quite a substantial tax deduction that is claimed in the case of apartments and units. Especially, in the case of new and recently built property units, this holds strong.
  • Based on the years of establishment, the depreciation schedules of the property might vary for owners all across Australia.
  • In order to get the well worth tax claims, the depreciation value needs to be kept in might as per the brand new or second-hand belonging.

How is Depreciation Deduction Calculated?

Depreciation deductions are primarily calculated on their respective rental property in the following two forms:

  1. i) Over the already constructed works: This includes the overall building subject to walls, doors, ceiling, windows, etc.
  2. ii) Over the inclusive assets/fixtures and fittings in the house: This includes geyser system, air-conditioning, cooktop, etc.

Apartment owners have the right to claim their entitlement over the common areas of their apartment/unit development. This makes them eligible for claiming over the construction cost and shared assets’ cost.

This means one can claim deductions over the depreciation of their share over the inbuilt facilities of the property. Driveways, basements, carparks, landscaping, pools, gyms, etc are some examples.

However, in case of purchase of a second hand holding after May 2017, the owner isn’t liable towards claiming any annual depreciation.

On the contrary, they own the right of claiming the annual depreciation while selling the property even for a purchased second-hand apartment, bought after May 2017.

Boosts Deductions in Terms of Apartments/Units

·      Higher the construction cost of the apartments/units, higher the deductions

  • One of the prime facts about the multi-level aspect of an apartment/unit is that the construction cost per square metre is generally higher as compared to any other standard residential house.
  • With the depreciation of the constructed works being in complete tune with the construction cost, higher construction cost always tends to offer higher deductions for the correlated depreciation, every year.

However, in order to maximise the depreciation claims, one needs to get in touch with a quantity surveyor. This helps in creating the right estimate tax returns and overall property depreciation tax deduction trails, as well. Right from inspecting the property to collection information and concluding the Capital Allowance and Tax Depreciation Schedule, they help in all.

What Tax Deductions Can I Claim on My Rental Property This Financial Year?

You are eligible to claim a deduction against your present year’s income for expenses pertaining to the maintenance and management of the property. It will also include interest on loans. Many people enjoy depreciation tax benefit in Australia and reduce their tax liability. When you desire financial freedom, an investment property appears to be a lucrative proposition, in particular with tax benefits. A landlord has got several ways to reduce his annual tax bill. These deductions are generally the difference between your negative cash flow and positive cash flows. Investors will be able to claim deductions on their property during tenures in which the property was tenanted or remained available for rent.

Here some crucial tax deductions that you must never overlook:

1. Interest expense:

If you sought a loan to buy a rental property, you can claim a deduction for interest charged on loan. But, the property should be tenanted or must be available for rent in the income year. Meanwhile, you will be permitted to claim interest on the loan you used for buying a depreciating asset for the rental property. It will also include any repairs you made to the rental property as a result of storm damage. Additionally, you will be able to claim the interest you have pre-paid approximately 12 months in advance.

2. Pre-paid expenses:

You can also claim a tax deduction for any pre-paid expenditure you incurred in the current year. Pre-paid expenses can be defined as expenses that provide for services covering beyond the existing income year. It may include payment of an insurance premium on January 1 that offers cover throughout the calendar year. You will be able to claim an instant deduction for prepaid expenses of less than $1000. You may claim a deduction in case expenses of $1000 or more where the service period remains 12 months or less. And, if the prepayment does not fulfill these criteria, then they may need to spread for yet another two or more years. It is important to get in touch with an expert to prepare a property depreciation schedule.

3. Repair and maintenance:

You will be eligible to claim an entire deduction for the expenses of repairs and maintenance in the year you incurred them. However, the expenditures must be directly linked to wear and tear or other destruction caused due to renting of property. Some examples of repair may include replacing broken windows, parts of fence, machinery or electrical appliances. Examples of maintenance will include repainting damaged interior walls, maintaining plumbing, etc. You need to calculate precisely tax depreciation schedule for rental property.

4. Strata fees:

If your property happens to be on strata title, you will be allowed to claim expenses of body corporate fees. However, if the fee contains maintenance and garden expenditures, you will not be able to claim these expenditures individually.

Conclusion:

You may claim the above-mentioned expenses and bring down your tax liability. Everyone wants to enhance his/her rental home returns in Australia and leaves no stone unturned to seek claim of potential expenses. Your land tax can also be claimed as a tax deduction. If you face any confusion regarding which expenses can be claimed, you may speak to your accountant. An expert accountant will help you find out your claimable expenses.

Negative Gearing: Everything You Need to Know About It

Negative gearing is a term for describing a circumstance when money earned through an asset is less than the expenses for holding the asset. The term applies to any kind of investment. The expenses include the fees for managing the property, the interest on the investment loan, depreciation, and more. In case you hardly have the time to manage your tax return Australia, then you need to contact an accountant. So, as we check how negative gearing works, you can read ahead to know the advantages of positive gearing.

How Does Negative Gearing Work?

Whenever an investor negatively gears a particular property, he can claim the overall loss as the investment loss. The accountant considers the equivalent loss while filing tax returns. Moreover, the accountant deducts the loss from the current taxes, but with some restrictions. Even though the investors don’t aim at negative gearing, it helps them to realise long term capital gains. The loss also helps to regain intermittent losses for a short term. This, in turn, helps to pay off less loan and increase the rent till the situation changes.

Before moving ahead with negative gearing, the investors should be financially stable. This would assure them to cover up for the shortfall until they sell the property. On the other hand, in case the floating index is an aspect to calculate interest, then investors can expect low rates. If you are unable to determine the asset value for a year, then refer to the tax depreciation tables 2015.

Advantages of Negative Gearing

The main advantage of negative gearing is that it helps to reduce the overall tax. It helps the investors to focus on returns for the long term instead of cash returns for a short time span. In case the situation is not negatively geared, then it’s better to ensure that the property income is more than the expenses. This leads to manage the property in a better way and spend little on maintaining the property.

Some investors may add on that negative gearing may improve the rental affordability and impact the property supply. But, ideally, this aids to lower down the purchase price as well as the rent.

Disadvantages of Negative Gearing

Among the disadvantages, negative gearing leads to reducing tax payable. But, such a loss comes under negative cash flow. Hence, it is not appropriate for investors who wish to earn more through a passive source of income. With no extra money, the investor may lose the property due to debts not paid on time. You could claim tax refunds on rental property if you’re seeking ways to save on tax.

With the ever-changing market trends, negative gearing may lead to higher risks. In fact, the investors may have faced a lean phase when they rely only on capital gains. However, a positive cash flow assures the investor about gaining profits even when the property value declines. Later, the investor may think about reducing the limit as per their borrowing capacity. This makes it difficult to move ahead and grow their portfolio.

Conclusion:

Before making a decision, the investor must get in touch with an expert to learn more about the strategies. This can help them to pace ahead with their wealth-creating journey depending on the financial and personal goals. Once they get in touch with a professional, they don’t have to bother with the yield on investment property. They can also check out for a depreciating schedule to learn more about the tax returns.

4 Important Things That Your Tax Depreciation Schedule Must Include

A depreciation schedule has emerged as something that every individual investor must invest in. It can assist you to reduce the tax you need to pay apart from enhancing the return on investment for your property. When you decide to claim depreciation on your investment property, you will require an investment property depreciation schedule. And, the federal tax depreciation schedule must be prepared with the help of an expert quantity surveyor. The expert will be listing your entire depreciable items that may include effective life that remained in every item. The reason why it must be prepared by a quantity surveyor is that they have been recognised by ATO.

Here are some of the crucial things that your tax depreciation schedule must include:

1. Common indoor items:

A professional quantity surveyor must include common indoor items while preparing a tax depreciation schedule. You are eligible to claim depreciation on your unit’s assets. And, you can also claim for assets that you share with other units in the apartment complex. However, you will be allowed to claim your share of those assets. These common items may include fire extinguishers, AC units, and lifts, among others. You will also be entitled to claim for ventilation and hot water systems. Expert quantity surveyors from Deppro can effectively prepare your depreciation schedule and minimize your tax liability.

2. Scrapped objects:

When you carry out renovations on your property, you may be left with some assets that don’t have to use anymore. Many people tend to dump the scrapped objects sans giving any second thought. Old objects have a scrapping and residual value. You will be eligible to claim a final depreciation sum on an object that you plan to chuck away after renovation.

3. Common outdoor objects:

You can also claim depreciation on common outdoor objects. It is because any object outside the apartment does possess value to you. It may include the fences, pathways, several landscaping objects like pergolas. You can also make a claim on a shared swimming pool too. These items will find their way into your depreciation schedule. However, you may not be able to claim for every common outdoor object. Meanwhile, you must be continuously updated about the ATO depreciation rates.

4. Design professional’s fees:

It is worth noting that you may include fees you paid to your design and construction expert in your tax deductions. Your depreciation schedule should account for the expenses of these construction works. It will include the amount you paid to a designer who conducted work on the project.

Conclusion:

The above expenses will help to maximising your claims. The expert QS will help in preparing your rental property depreciation report. Meanwhile, don’t forget to include the money you paid to the council. As you need to pay fees to the council for several services. These are the expenses that you may incur with lodging application fees or securing council permits. If your building is your own property, you may have to spend money on infrastructure. So, your depreciation report must include the above expenses.

Claiming the Maximum Deductions Out of Your Rental Property

Are you paying lots of taxes? Worry no more. You must start checking your options – can you claim depreciation on a rental property. Investing in property has already emerged as a top choice for many individuals. Additionally, there are several expenditures that you may claim in the form of tax deductions from a rental property. There are scenarios when allowable deductions may surpass rental income and put you in a loss position. It is also known as negative gearing.

Given below are some costs that will help you enhance your deduction on your rental property:

1. Borrowing costs:

This expenditure is linked to the fee produced when borrowing money for the purchase of a property. It is worth noting that these expenditures are eligible for deductions over a period of loan or more than 5 years period. For this, the total borrowing expenditure must be over $100. You will be able to claim several borrowing expenditures which may include Loan establishment fees, mortgage broker fees, stamp duty levied on the mortgage, lender’s mortgage insurance among others.

2. Gardening fees:

These costs are also eligible for deduction. This will include dump fees, tree cutting charges, replacement costs incurred in garden tools, sprays, fertilisers, mower expenses, etc. You may speak to leading professionals as well if you face difficulties in calculating your tax depreciation cost.

3. Land Tax:

Land tax is the tax levied on the value of the land which is also tax-deductible. The bill of assessment of the land tax payable will be provided soon after the land tax registration form is submitted.

4. Repair and maintenance cost:

The cost that you incur when doing repairs and maintenance is also deductible. However, the cost can be claimed at a specific rate every year. Repairs are referred to as the cost that you bear when there is damage or deterioration to the property. For instance, when you replace a part of a window damaged during a tornado or hurricane, it may also include repairing electrical appliances, plumbing, painting the rental property, and repairing due to falling of tree branches, etc.

5. Telephone expenditures:

You can also obtain deductions on expenses incurred due to telephone calls. The telephone calls that you make while maintaining the investment property are always tax-deductible. You should calculate precisely all the allowable depreciation on rental property to maximise your deduction.

6. Water expenditures:

It is interesting to note that water rates are also tax-deductible. However, it will happen only in those scenarios when you pay the water bills and not your tenant.

7. Stationary and postage expenses:

This may include the expenses linked to the purchase of pens, paper, or various other office stationery items. It will also comprise the postage used for a rental property to communicate with agents or tenants. These expenses will be deductible.

Conclusion:

Building tax depreciation may also include various expenses for which you may claim a deduction. You may also seek deductions on agent fees and landlord insurance to cover the property from being damaged.

4 Commercial Property Depreciation Facts You Must Know

Many commercial property owners aren’t aware that they are eligible to claim depreciation on property. According to a study, approximately 80% of investors miss the benefits of their commercial property and end up losing plenty of money every year in Australia. It is imperative for all commercial property owners to claim depreciation. These deductions can significantly enhance the positive cash flow of an investor and diminish the negative cash flow. We have prepared a list of significant factors that property owners may consider in a bid to earn more from their commercial property.

Given below are the factors about commercial property depreciation:

1. Depreciation and how you can claim it:

According to the ATO, it is necessary for investors to prepare a report of their income-earning from their commercial property. This will prove useful when preparing their income tax assessment. And, property investors of commercial property are eligible to claim depreciation. Depreciation takes place when a property shows signs of wear and tear in its structure, fixtures & fittings over the years. It is considered to be a non-cash deduction which means that investors must not spend any amount to claim it. Property investors must calculate depreciation on rental property in an accurate manner to maximise their claim.

2. Life of a building:

Property owners will also be eligible to claim any latest renovations that took place since July 20 1982 snd, it doesn’t matter if it was carried out by an earlier owner. Additionally, plant and equipment depreciation can be claimed as well, irrespective of age. The instances of plant and equipment may include carpets, and ac units, among others. Expert quantity surveyors will carry out a property inspection and take images and prepare a list of additions made to the commercial property. They will offer an itemised tax depreciation schedule to property investors that include the availability of deductions for a period of 40 years. You may seek a Deppro review from our professionals, in case you encounter any confusion.

3. Depreciation of other items:

While preparing a commercial building property depreciation schedule, it may be tough to work out who is eligible to claim depreciation for specific items. Landlord and the sitting tenant will be able to claim depreciation for any fit-out made to a property. Tenants of commercial properties will be eligible to seek a claim of depreciation for any fit-out that they introduced. It may include blinds, shelving, and carpets, among others. Additionally, owners of a commercial property can also claim depreciation on any installed asset or assets left by a previous tenant.

4. Select a method:

After calculating depreciation, property investors may choose two methods for making a depreciation claim. This includes: diminishing value method and prime cost method – property investors can use either. Deductions will be calculated according to a percentage of balance you leave to subtract under the diminishing value method. Meanwhile, the deduction for every year can be calculated as a percentage of cost under the prime cost method.

Conclusion:

You must be aware of how to calculate depreciation for your commercial property accurately to maximise your gains. If you face any difficulty in calculating depreciation, use our Deppro contact number, and call our experts. They will help you calculate it accurately. You may consult their quantity surveyor as well who have achieved specialisation in tax depreciation.

4 Tips to Claim Depreciation for Childcare Centres

Investors tend to show a keen interest in a property as there are enormous benefits when they file their tax return in Australia. Investors are keen to get a share in the profit of the growing real estate market.

Here are some of the reasons why childcare centres are becoming so attractive for investors:

1. Increase in depreciation schedule:

There has been a rise of 67% in tax depreciation schedules for childcare centres. The depreciation schedule has been rising consistently every year as there is a surging demand for these properties as an investment. The industry has witnessed robust growth in recent years. The fast growth of the industry has presented numerous opportunities for investors.

2. High demand for childcare centres:

There has been a high demand for childcare centres in the last few years. The main factors responsible for the sharp demand include strong rental yields and profitable depreciation deductions. However, some feel that there is an oversupply in the industry. Childcare centres have emerged to be a profitable investment. The hotspots may include suburban areas that have become famous among families. Additionally, these centres are becoming a famous option for proactive investors searching for the next asset to add to their portfolio. Among social factors, high birth rates and surging need for flexibility have contributed to the rising demand.

3. Long term agreement:

Childcare centres are largely leased out by tenants on a long term basis agreement that may last between five to ten years.  In this period, the centres offer positive rental incomes and remain a profitable asset to an investor’s portfolio. Investors can enhance their cash flow by taking benefit of the several depreciation deductions available from the many childcare centres. Childcare centres offer attractive yield on investment property that investors must not miss.

4. Huge deductions:

Reports suggest that when several depreciation schedules were prepared for childcare centres, it uncovered huge deductions over the life of the property. Owners can claim several depreciable items such as artificial grass, kitchen equipment, etc. And, tenants can seek advantage of the available depreciation deduction of their furniture, toys, and play equipment, among others. It is worth noting that owners of childcare centre have many plant and equipment assets. And, all of them offer some depreciable value.

Conclusion:

Childcare centres offer immense benefits to investors and help in lessening their tax burden. If you face any confusion while preparing the property report, you may seek the help of experts. According to a case study, owners get the opportunity of claiming $25,475 worth of depreciation deductions for plant and equipment. And, in the cumulative five years of securing the investment, the depreciation claim will total approximately $71,670.

5 Tax Saving Tips on Your Investment Property

When you purchase and own an investment property, it gives you the benefit of saving plenty of tax. You get the advantage of claiming the various expenses and some depreciation against your rental incomes. When you prepare your property depreciation reports, it helps in minimising your tax burden. You must ensure that you manage your investment in the right manner so that it yields you profit. Your investment should also help you achieve your financial goals. An intelligent property investor may adopt several strategies to reduce his tax and increase his tax benefit.

Given below are some key tips that will help you save tax on your investment property:

1. Manage your capital gains:

Capital gains created in a particular year can be reduced by offsetting it against capital losses that you face. If you are keen to decrease the capital gain on the sale of a property, you may think of selling any asset that lost its value. You get a 50% discount on capital gains when an asset is held for over 12 months. Since the saving amount is huge, you should consider the timing of any sale. It is worth noting that the important date for calculating your capital gains is the contract date instead of the settlement date.

2. Manage your capital losses:

The capital losses that you may face in any year can be extended to future years. You may adopt this procedure when there are inadequate gains to absorb in the similar year. The capital losses can be extended to future years for an unknown tenure. You will not be able to carry the losses back. Therefore, if you achieved capital gain, you can initiate a loss to offset it against. You may seek the help of experts to find out your exact property tax depreciation.

3. Claim building depreciation:

It is the depreciation that you may claim on the building itself. How you will be able to claim it will depend on construction costs.  For a large number of properties, you may claim 2.5 percent of construction for at least 40 years. You must be able to determine the construction cost. The ideal way to decide it is by hiring a quantity surveyor to make a property tax depreciation schedule for you.

4. Expenses incurred for visits to the property:

It is important to note that if you face expenses related to property visits, you will be eligible to claim them. They will help in boosting your returns.

5. Plant & equipment depreciation:

This is the depreciation of assets within the property. It will include things such as curtains, fixtures, carpet, etc. You need to upgrade or replace these things at some point of time as they tend to depreciate faster.

Conclusion:

You may claim the above expenses and reduce your tax burden every year. You must assess the tax depreciation life effectively during this process. If you are conducting any renovation or replacing something major, don’t forget to do a scrapping schedule. The quantity surveyor will be able to calculate how much value is left for a particular item. After that, you will be able to claim that in the form of depreciation.