Should I Buy an Investment Property with a Swimming Pool?

When you are looking to invest money into a property where you do not plan to live but rather rent out, you need to strike that sweet spot where minimal investment and maximum returns meet. Your property investment returns must be greater than the upfront costs and the recurring costs put together.

How Wise is it to have a Pool on your Investment Property?

Let us take an example of a swimming pool in the backyard of your house. Who doesn’t like to imagine a lazy sunny morning spent lounging by the poolside? Is there any greater joy than a swim in crystal clear blue water? A pool adds a lot of value to a house, for the owner as well as the resident. But we need to remember that a pool comes with several costs.

The Cost of a Swimming Pool

The cost of building a pool might be a one-time investment, but the maintenance of a pool is quite costly, and those costs are repetitive. If you have a traditional swimming pool, then cleaning of leaves and other debris would need to be done manually. But for more modern self-cleaning pools, the costs become higher. The property report for a house with a pool would have a large chunk of the expenses earmarked for the pool.

What Australian Tax Depreciation Rules Say?

Having read so far, you might be tempted to think that a pool on your property might not be such a great idea after all. But there is another important factor to consider – the Australian tax depreciation rules. As per these rules, several elements of the cost of building and maintaining a swimming pool can be set off against depreciation, and tax deductions can be claimed on them.

This is how it works. When a house is constructed, the money spent on it could be broadly divided into two categories. The first is capital works, and the other is plant and equipment. Capital works would include the fixed part of a building, like the walls, floor, and wiring etc. Plant and equipment would include removable parts of the property like smoke detectors, upholstery, electrical appliances etc. A complete list of both these types of depreciation expenses needs to be made by a certified agency like Deppro using an investment property calculator. This list is then submitted along with the tax returns and deductions are availed on tax on the basis of the depreciation calculated. Many elements of the cost of a swimming pool construction can also be included in this list and deductions claimed.

Final Thoughts:

On the whole, you need to consider the location of your property, the cost of the pool, and the amount you can claim later as tax. After considering these factors, you can decide wisely whether you should buy an investment property with a pool or not.

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!

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.

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 You Can Benefit from a Depreciation Schedule

Depreciation is an amount which is an acquired cost upon the asset’s original value corresponding to the service life of the asset. Over the years for which a company uses a machine, it becomes next to impossible to spend on a single asset for one long period. Therefore, it is essential to depreciate the allocation of the budget over the depreciation expense. It is one of the most under-employed rights which are available to property investors.

Tax depreciation schedules differ from other deductions that relate to property investment. It is a deduction that you can claim without much costs in a year. In general, you can pay a one-off fee and receive a 40-year depreciation schedule. Your analyst can use it each year to overcome your taxable income legitimately.

Advantages of Tax Depreciation Schedule

You can break a depreciation schedule into two divisions. One is the capital works and plants, and the other one is the article. The capital works continue to be the productive structure cost, any improvement or addition and frequently permanent assets that form an element of the construction or enclosing buildings.

These assets usually depreciate beyond 40 years and further form the ‘backbone’ of the depreciation statement. The factory & articles, called as plant and equipment, are the movable assets such as glass furnishings, devices, carpeting, exhaust coolers, fire bells, etc. These assets decrease at varying proportions based on the kind of asset and their shelf life as decided by the depreciation on investment property ATO. The shelf life of these valuable items falls between 5 and 15 years. This is the principal reason for the fall of more notable depreciation claims in the early years.

What are Tax Depreciation Schedules For?

Depreciation schedules can be altered to maximise certain advantages under the Australian tax law. These include the direct write-offs, low-value pooling and in taking the support of various partners and raised thresholds. After the inspection is complete and the data is accumulated under one file, it is given to the accountant. The information is provided in a compatible forma with that of the software. It not only eases off the workload, but also leads to certain benefits that exceed the expectations of investors in the long run.

Utilising a depreciation rate also encourages businesses to record assets at their net book cost. Organisations initially take into account the secured assets in corresponding to their original prices, along with an analysis of the wear and tear over time. As a matter of fact, the value of the asset usually declines over time, and that’s the basic depreciation schedule one needs to know.

Therefore, firms must calculate the tax depreciation investment property with the net cost price and deduct it from the accumulated depreciation cost.

You can highly benefit from the depreciation schedule and make sure you can get the maximum claims. Get hold of expert property depreciation consultants for convenient services.

Why Quantity Surveyors Are the Life of the Party

Popular with the name of “construction economist”, quantity surveyors are the best partners who help you to extract every single penny of profit from your investment property. Along with the cost-efficient planning for your investment, another important function of QS is to facilitate maximum depreciation returns for your property. Tax depreciation quantity surveyors make your investment experience a profitable one.

Who are quantity surveyors?

In layman language, quantity surveyors are professionals who assist you in the construction and maintenance costing of your investment property. They refer you to all the other parties associated like architects, accountants, engineers etc. Facilitating the schedule for the depreciation assets for tax purposes and estimating costs and returns are some of the major functions performed by them.

Benefits of Hiring Tax Depreciation Surveyors

Though there are a number of benefits which can be availed by appointing tax depreciation surveyors for your assistance, the major ones are as follow:

·      Depreciation Schedule:

A depreciation schedule is a complex report that has all your depreciable assets listed on which your returns for the same are calculated. Some investors might make these schedules themselves, but it is beneficial to appoint a professional quantity surveyor to form detailed and errorless schedules. Deppro quantity surveyors also provide such services.

A quantity surveyor aims at helping you to derive all the possible benefits from your property in the short term as well as long term. By giving the responsibility to a professional, you free yourself from the confusing burden. For a single year, the derived benefits might seem less, but when combined and totalled, you can save thousands of dollars over the years.

QS will prepare a depreciation report after inspecting every single depreciable property and by measuring and noting their values. This will carve out the exact construction cost of your building and of all the assets including equipment etc. Once all the information is collected and verified, a report is generated and split categorically under the building, plant, and equipment costs.  This depreciation report can further be sent to the accountants for processing.

This report will help you gain returns on your property against the annual income. A small amount of money paid to the QS would help you derive benefits for decades as the life of the accuracy of a depreciation schedule is 40 years. So you can keep enjoying the long-term benefits over the years.

·      Financial Benefits:

As the schedule can be used for up to 40 years, major deductions can be made in the taxable income over the years for profitable investments. Thus, as an investor, you should be well aware of the derivable profits of your property to make sure that you are being an effective one.

Conclusion:

Thus, a quantity surveyor is considered to be the life of an investment party for no wrong reasons. Many people tend to realise its importance during the later years of investment, whereas, taking the assistance of one in the initial stages can help you save back those important dollars which you might need to recover from the initial establishment expenses and losses of your investment. Hence, it is important to make a wise choice.

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!