What You Need to Know About the Legislation Changes to Rental Property Tax Depreciation Claims

It’s always quite confusing to adapt to new changes. Similar to the altered legislation to the rental home returns which were observed in 2017. It has been tracked that numerous investors and rental property owners have issues regarding the claims available for them.
To everyone’s relief, what is worth appreciation is that the items under the Capital Works such as the swimming pools, toilets, windows, foundations, walls, and ceilings can be claimed for deductions just like before. There are no changes made to that category.
The alteration has been in Division 40 which includes the subparts of Plant and Equipment category including the electronic appliances, carpets, alarms etc. These are the assets which are extra, in other words, which aren’t a part of the built of the property.
Which Properties Got Affected by The Change?
Well, when summarized, it can be said that the deductions for the above-mentioned category that is the Plant and Equipment is not applicable on the condition that the property was made second hand after 7:30 pm on May 9, 2017. All the investors who have invested in the second-hand property before the mentioned time and date can claim returns on depreciation residential rental property as they used to before.
Also, if a new Plant and Equipment asset is bought after the specified date, it is applicable for claims until the asset’s life remains effective. Lastly, another notable fact is that the investors residing in their building before July 1, 2017, do not have to think about the changes made in the legislation as they are exempted from it.
How to Claim the Right Returns Efficiently?
Sometimes technical terms become quite difficult to understand and analyze and hence it is better to seek professional help rather than trying to be the jack of all trades and master of none. Hence, creating a tax depreciation schedule for a rental property can be extremely easy if done by an experienced, professional quantity surveyor. A person with that profession knows exactly what is to be done for your property and will help you extract maximum benefits by giving you a clear-cut view of your costs, expenditures, and returns.
There are a number of companies providing professional help to people in need of a good tax depreciation schedule and hence you can look out for one such service provider.
The main advantage of choosing this way is that they have immense knowledge about the concerned topic and they are aware of such minor details which can fill up your pockets and make you feel rich by just paying a humble fee for the service.
What after June 30, 2017?
For your information, even if it is past June 30, 2017, you are eligible to calculate depreciation on rental property and submit a tax schedule with your tax returns for 2017-2018. Hence, it’s a win-win situation for many of the investors.
Deriving complete information of such legislative changes isn’t a cup of tea and might leave you confused and unsure of your action despite the hard efforts. Thus, a little bit of assistance and help is never harmful.

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!

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.

How Does Depreciation Add Value to Your Investment?

Every investor invests their wealth into a property to earn profitable returns and this is a story prevalent since years. However, this becomes a little tricky with older properties such as an older building. Due to wear and tear from time to time, its value diminishes over time. Wear and tear of a property is a constraint that is considered at all times when you plan to sell out a property. Depreciation tax benefit serves as one of the valuable means to promote the value of commercial or residential property for investors.

If you have invested in a property of late, depreciation can help you to not only retain its value but also get you more out of it. By lowering the overall tax liability, you can save hundreds to thousands of dollars every year on your taxes.

Read on to know more about how you can get more out of tax depreciation investment property.

Tax Depreciation Adds Value to an Existing Building or Structure:

It is important to bear in mind that tax depreciation does not enhance the value of land. It maximizes the value of a property, especially an old building which is subject to wear and tear. Because it may necessitate renovation or maintenance at the subsequent stages, things can get expensive on the part of an investor. Tax depreciation on such properties can help you keep things under your control in terms of charges involved in repairs or renovation.

Tax Depreciation Does Not Involve Any Upfront Payment

Being a noncash deduction, depreciation does not necessitate the payment of upfront charges. However, to overcome various legal hurdles, it is imperative that you gain an understanding of requirements related to depreciation. This will provide you with the right idea to improve the cash flow of your investment.

Tax Depreciation Helps an Investor Conceal a Cash-Positive Rental:

Depreciation has an interesting spin-off. To elude the possibility of paying an extra amount of money, you can use the tricks of the trade linked to the Australian tax depreciation. By following this simple rule, you can make cash-positive rental look like a loss on paper. Of course, you need to reach out to the right consultant to take advantage of this feature.

What Should You Do to Reap the Benefits of Depreciation?

If you wish to enjoy the positives of depreciation on investment property ATO, the most important thing you need to do is follow the rules. This will help you keep abreast with the ways in which you can benefit from depreciation in the best possible manner.

Because it is easier said than done to deal with the ins and outs or the technical details of the rules related to depreciation, you should consider hiring a professional. Think about consulting an accountant to ensure that your practices are in line with the rules. This is the sure-fire way to benefit from depreciation as an investor.

Everything International Students Should Know about Doing a Tax Return in Australia

Tax is always a matter of stress, and for international students, it can become a hectic scenario. Taxes are something that are far from pleasant and may always cause a strain for students. Most of the students in Australia look ahead to the tax time because they expect to get their money back after they complete their tax returns. However, if you have to work on a student visa for 20 hours or less than that you are exempted from paying taxes, to prepare yourself for the Australian tax return. Here in this post, you will gain a brief insight into how can you can go about with the procedures.

Do I Have to Abide by a Tax Return Policies?

If you are working and earning in Australia, then you are liable to file your taxes. Students who are living in Australia for more than six months fall under the tax paying threshold. However, you can also come across certain situations which will restrict you from paying taxes or you may get tax deductions. You must inform the ATO (Australian Tax Office) in that case.

When Can I File My Taxes?

The period for tax return filing is from July 1 to October 31. Individuals who fall under the income tax category have to file their taxes within this duration to avoid any troubles later. Working professionals in the country must abide by this rule so that they have a smooth tax return filing without having to go through the hassle and paying fines which might become difficult for international students. Their job might be at stake if the proper steps are not taken while filing tax returns.

Procedures for Lodging a Tax Return

In the online age, everything is possible sitting at home. Students can log in to myTax browsing through the website by ATO. Further, you can create an account under myGov and link it with the ATO website. Make sure you go through with an authorised tax agent and lodge your paper on the tax return Australia. Moreover, you can use the Tax Help Program which works for training volunteers and help people on how to go about for their tax returns.

International students require their TFN-Tax file number, photo proof, and their income statement. Generally, by June 30, employers present their employees with the income statements and entail everything regarding how much you earn and other details about your work.

Conclusion:

After you have filed your taxes online, you will need to wait for about two weeks to get your refund. If you are a university student, then you can take advice from the economic service agents from the university itself. They have ample information to give you the right idea on tax filing and returns. If you have some queries regarding filing your tax returns, you can call at the Deppro contact number for quick services.

How Is Depreciation Applied Following Natural Disasters?

Annually, people lose millions and millions on their properties owing to unforeseen natural calamities. These unforeseen disasters hit them like a wave leaving nothing but ruins. Natural disasters especially affect realtors and property investors. These participants of the property market more often than not, find themselves in heavy debts and losses.

Such stressful situations call for replacement of assets as well as rebuilding and refurbishing all their entire property.

The brunt of this challenging process has to borne by both the property owner as well as the tenant. However, the final improvement brought upon the property makes it for a better asset. And thus invites a rather increased depreciation deduction tax. This tax depreciation must be studied properly.

How to Maximise As Well As Maintain the Compliance?

The following table will indicate exactly how you can optimise your compliance for depreciation deduction levied on your disaster-ridden property. And hence give you a better insight into depreciation tax benefit.

Asset Properties Covered in Insurance Properties NOT Covered in Insurance
Replaced Will need to make alterations in the Tax Depreciation Report Scraping of the residual value of the replaced asset + calculating depreciation for the new asset.
Repaired Instant deduction of the expenses for repairing + declare any arising income from insurance Instant deduction of the expenses for repairing
Upgraded Will need to make alterations in the Tax Depreciation Report Scraping of the residual value of the replaced asset + calculating depreciation for new asset.

The Jargon of the Table

  • Repaired: It refers to the minor tweaks here and there in the pre-existing asset to restore it. It doesn’t mean improving upon its appearance but only the functionality.
  • Replaced: This refers to procuring a replacement for the pre-existing asset which mimics its exact functionality and usage. In short, a new asset of the same model in place of the original mode.
  • Improved or Upgraded: This refers to the replacement of the damaged asset or machinery. However, here the new model so procured is an improvement or upgrade to the existing asset. Which means a better functioning and more specifications.

The Process

The entire property of availing deppro benefits can seem a little daunting but here’s how it goes down:

In case the quantity surveyor has initially assessed the entire property which is being claimed for then it gets easy. As now it only requires adding alterations to the previous report which can happen at a minimum cost.

But, in case the prior assessment of the property in question didn’t take place, then it gets more cumbersome. As now you need a full inspection followed by creating a report.

This should be noted that the time of the entire procedure is crucial and thus it should be attended as soon as possible. We suggest you to approach our experts with individual situations or crises. This will ensure that all your previous, current as well as future claims are optimised. They will also ensure that if your claims are in compliance with the ATO guidelines or not.

Wrapping-Up:

Disasters don’t come announced, they can hit you anytime, anywhere without notice or warning. Such situations can have repercussions. So it’s best that you’re prepared with all the ins and outs of knowing your depreciation for property.

Our website is specifically curated to deal with such mishaps. Hence, if you’re facing something similar or you may want to be prepped for the future, then contact us. We will tell you all there is to know about the procedure for claiming depreciation on the property as well as its implications.

So what are you waiting for? Contact us today!

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.