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.

How Claiming for Depreciation Boosts Property Cash Flow

Professional tax depreciation organizations can spot several items in an investment property for which you will be eligible to claim valid depreciation benefits. Investment property owners can enhance their cash flow by claiming depreciation on investment property. You should not forget to claim a tax deduction on several household items as it will reduce your tax liability. You will be stunned to find out that even your garden gnomes are allowed to be depreciated for tax purposes. Several investors living in Australia end up underestimating the figure of items that can be depreciated for tax purposes.

Here are some vital details that you should not miss for boosting your property cash flow:

What is depreciation?

Depreciation can be defined as wear and tear of a property and its assets over a period of time. When you claim for depreciation, you are set to claim a tax deduction for loss in value of those assets as they age with time. Depreciation has emerged as one of the biggest tax deductions available for property investors every financial year. It also has the capacity to boost the rental property’s cash flow every year. You must claim for depreciation by using a tax depreciation schedule prepared with the help of a reliable quantity surveyor (QS).

Don’t forget to do your tax return

Depreciation can be claimed in the form of tax deduction in your tax return every year. You remain eligible to seek a claim for it in a similar manner as you claim for insurance, repairs & maintenance, property management fees, etc. The major difference from the other claimable expenditures is that depreciation has turned out to be a planned and calculated deduction. It implies that how much you will be able to claim for depreciation will be calculated with the help of formula. The calculation will be based on your building’s construction cost (Division 43), asset values, and effective life of every asset in your property (Division 40).

What is the role of an expert Quantity Surveyor?

It is not a herculean task to claim for depreciation. You can hire the services of professional QS to prepare your rental property depreciation schedule. An expert QS will be entrusted with the task of calculating depreciation that you may claim yearly and report it in your depreciation schedule. A depreciation schedule can be explained as a one-off purchase highlighting specifics of all deductions going ahead for the rest of your property’s lifespan. You may provide your depreciation schedule to a reliable accountant when you do your taxes every year.

Conclusion:

You can start claiming depreciation as it is a relatively simple procedure. You may get in touch with specialist QS from Deppro depreciation to arrange a tax depreciation schedule for your property. It is worth noting Quantity Surveyors have been recognized by ATO under tax legislation TR97/25. A Quantity Surveyor possesses the important skills required for estimating construction costs for depreciation purposes. You should also organize a site inspection of the property to grab measurements and take pictures’ record of any assets inside the property.

Everything You Must Know About Commercial Property Depreciation Deductions

In today’s era, entrepreneurs face many significant challenges. Professionals need to access everything immediately when business owners try to increase cash flow. But, to boost cash flow in a better way, the companies and commercial landlords have to update the depreciation schedule. So, as you read ahead you will learn more about the commercial property depreciation deductions. But, before moving ahead, let’s check out the results we got from some of our commercial clients.

Results depending on the industry

As for small workplaces, the claims for the financial year 2020 were equal to $18,004. This was quite less than the claims for the first 5 financial years, which was $58, 597. But, on the contrary, for those who own small warehouses, the claims for the year 2020 and across the first five financial years were $6,603 and $29,222 respectively. As for the results for city commercial building, the claim across five financial years was as high as $448,111.

How do professionals calculate the depreciation on commercial property?

As for the calculation, depreciation differs for different types of commercial buildings. Feel free to seek help from professionals if you are unsure about the depreciation on investment property ATO.

The first step to calculate the depreciation is classifying the buildings depending on the purpose. Later, the ATO comes up with depreciation rules for every type of category. There are many factors that can affect the rate of depreciation. These factors are applicable to buildings that fall under Division 43 and Division 40.

On the whole, the total depreciation a person can claim is divided between Division 43 and Division 40. Usually, professionals use the Prime Cost Method to calculate Division 43 depreciation. However, they use the Prime Cost or Diminishing Value Method to calculate the depreciation for Division 40 assets. Besides, Division 40 assets can come under the low-value pool based on the effective life. The classification would also matter on the maximum tax depreciation deduction done earlier.

How can a person claim property depreciation deduction?

When you need to claim the deduction, you must contact a quantity surveyor. As the professional presents a depreciation schedule, you can observe the amount you can claim every year. But, your claim would depend on the value of the commercial building. It may also vary due to the decline in the value of the income-generating assets. According to the rules of ATO, the surveyor should come up with a depreciation schedule only for buildings built after September 1989. The schedule would come into the picture even when you are unaware of the property’s construction costs.

As for the fees, you only have to pay for just one depreciation schedule. Once the surveyor coordinates with you, he would work out the assets that would depreciate in the future. The schedule is further sent to an accountant, for effective calculation of deductions. The accountant then considers the equivalent amount for the annual tax returns.

Conclusion:

If you have any questions regarding the depreciation deductions, then you need to reach out to tax depreciation professionals. In order to predict the tax depreciation investment property, you use the investment property calculator. But, if you’re an investor, who wants to maximize returns, then you could go through the depreciation reports. You can research online and avail the report which is available online. Apart from everything else, you can also seek answers for questions pertaining to capital gains.

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.

Benefits and Shortcomings of Renting a Furnished Property

When a property owner plans to rent their house, there are many things that come along with it. Renting in a furnished or unfurnished format is just another thing to consider. However, there are various advantages that an investor can enjoy by renting their property as a fully furnished residence, especially depreciation for tax purposes. However, one needs to take into account all the factors to determine whether letting the property in a furnished state outweighs letting it out in an unfurnished condition.

Disadvantages of renting a furnished property

Though there are many advantages of renting a furnished property owing to the tax benefits, there are a few disadvantages too. The first shortcoming is that you are required to spend oodles of money when you plan to furnish your home. In no way, is it a cheap investment; expect it to cause a money drain. On the other hand, you may not be sure about how your tenants will look after your possessions. Finding people who can do justice to your property is a challenging task. Thus you may always find yourself in skeptical mode worrying if your belongings are in safe hands.

Advantages of renting a furnished property

On the contrary, there are a few reasonable advantages to renting a furnished property. A furnished property makes your house look appealing. Thus you can increase the weekly rent amount. A furnished house attracts the customers; there are less chances that your home will face rejection and lie vacant for a long time. Apart from all these benefits, one of the major benefits that one can redeem is tax benefits. Yes, furnishing is proportional to high weekly rentals and property tax depreciation at the same time.

Depreciation benefits for a well-furnished property

Renting a fully-fledged property allows some benefits re: depreciation deductions. The house depreciation report depends a lot on the circumstances and the property type that the investors are planning to rent. The owners can claim a deduction even on the plants and equipment that exist in the property based on the life of the items. Yes, all your smoke alarms, oven, fixtures, etc. can also be listed down for a tax rebate. The depreciation rates of these commodities are generally higher than that of capital works or construction.

Though you may feel that furnishing your property may cost you a few more bucks, it can serve fruitful to you in the long run. The initial investment can bring in long term benefits of claiming tax rebates every year.

Bottom Line:

Seeking advice from experts and getting them to prepare property depreciation reports can further help you to reap more benefits by using their years of expertise and knowledge.

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.

Uncovering the Tax Benefits of Commercial Property Depreciation

Are you facing difficulties deciding whether to invest in a commercial or residential property for your portfolio? It may become difficult to comprehend tax depreciation allowances available for investors of commercial property over those available for residential properties. There are scores of rules that are applicable and differences in depreciation discovered may vary considerably. However, when you gain awareness on commercial property depreciation, it will assist you in making informed decisions. You must acquire detailed knowledge of depreciation rules for rental property and commercial properties.

Given below are some ways that will help you in enhancing your tax benefits:

1. Are older buildings eligible for building allowance?

The building allowance can be described as a decline in the value of commercial property’s concrete, mortar, brickwork, concrete, etc. The date when construction began will help in deciding what building allowance you may claim. For non-residential properties, allowance is kept at varying interest rates. It is 2.5% (20 July 1982 – 21 August 1984), 4% (22 August 1984 – 15 September 1987), and 2.5 % (16 September 1987 – Onwards). You should have detailed knowledge of investment property depreciation rules but if you don’t, contact Deppro today to learn more.

2. Claimable objects differ by industry and actual life:

Every year, the ATO prepares a list of assets that you can and cannot claim. Commercial property owners do not have their own list. However, some assets are eligible to be claimed at varying rates to residential properties. For example, carpets are eligible to be claimed for a period of eight-year in commercial and ten years for residential. You will also find industry-specific assets that the ATO has specified for depreciation claims. And, if you have a restaurant, you can claim items in particular to your line of business. It is important to get the property valuation done by an expert.

3. Tax break assists small-time business owners:

It is worth noting that small business owners can significantly enhance their cash flow with the help of a tax break. According to the May 9, 2017, federal budget, the immediate asset write-off got stretched till June 30, 2018. The federal budget projected to stretch the legislation in 2018 once again and, after a long postponement, the extension of legislation was passed by Senate on September 12, 2018.

Conclusion:

The bigger the building, the more you may claim. The height of the building may play an important role in the amount of depreciation available for property owners. You may refer to ATO property depreciation rules. Bigger structures may attract increased deductions because there is more capital works expenditure involved in the building construction. And, multi-story buildings largely have common property assets like lifts and fire services that may lead to plant and equipment depreciation.

Getting Smart about Tax Depreciation

It is vital to claim depreciation as it is one of the most important tax benefits that you can avail. However, several property owners are not aware of this benefit. You should never overlook depreciation for tax purposes.

Depreciation can be defined as a non-cash deduction. You do not have to invest even a single penny to claim it. As any property ages, it begins to witness some wear and tear. The Australian Taxation Office (ATO) does not bar investors from claiming rental and investment property depreciation. It is interesting to note that the ATO has recognised over 1500 items as depreciable assets. You may seek the services of an expert Quantity Surveyor to claim these deductions.

Given below are some key points that you must be aware of while claiming tax depreciation:

Plants and equipment:

The ATO has identified and specified that plant and equipment undergo wear and tear at a relatively fast rate. As a result of this, these items may need to be replaced a little earlier than others. Plant and equipment may include the loose assets or control panels for automated systems in the building. These items include carpets, ovens, blinds, cooktops, AC systems, door closer, garage door motors, and freestanding furniture among others. If you are still facing some confusion, get the Deppro contact number and eliminate all your doubts.

Capital works allowance:

These are based on the past construction cost of the investment property. You will be eligible to claim capital allowances on your actual residential property where it was built after September 15, 1987. It is important to note, you can claim any qualifying renovation or developments completed either by you or the earlier owner. For instance, if you constructed your property in the year 1996, you can assess the cost to construct the property at that time and you will be able to claim 2.5 percent of the value each financial year. The depreciable items are driveway fences, sinks, basins, baths, garages, door & window fittings, etc.  You may also like to read helpful Deppro reviews to clear your doubts.

Can you claim depreciation if it was built before 1987?

To be eligible for depreciation deductions, the building does not have to be new. New and old residential and investment properties will attract depreciation deductions alike.

Depreciation schedule:

You must be aware of depreciation schedules and how they may be able to help you to save money. Any building qualified to claim building write-off allowance has a maximum life of 40 years from the date when construction was finalised. In other words, the owner will be eligible to claim a maximum of 40 years of depreciation on a new building.

Conclusion:

You must prepare your house depreciation report effectively to minimise your tax liabilities. According to research, 15 percent to 35 percent of the construction cost of a residential property is manufactured from plant & equipment items. You should maximise their value in order to maximise your depreciation claim. Your depreciation schedule will outline the specific deductions available on a particular property; the details will come handy for the property investor while preparing a tax return report.

Why you Need a Depreciation Schedule when the Construction Cost is Known

As the financial year comes to an end, it becomes imperative to get your depreciation ATO tax depreciation schedule sorted. You gain several benefits of securing a depreciation schedule prior to June 30. It will help in enhancing your return and make the most of your investment. It is worth noting that a quantity surveyor report also consists of a schedule of depreciable assets also known as capital allowances. Meanwhile, a different deduction for the fall in the value of depreciating assets in a rental property can be claimed.

Given below are some of the points that you must be aware of the depreciation schedule:

1. Depreciation deduction:

The Australian Taxation Office permits the property owners to seek a claim for depreciation or fall in value as a deduction. Depreciation has been categorised as a non-cash deduction thus meaning an investor won’t need to spend money to be able to make a claim. It is for this reason that depreciation deductions are ignored. And, it becomes an expensive mistake for investors as depreciation deductions present huge taxation advantages. When tax time arrives, property owners should ensure they have claimed all the deductions for which they are eligible. Income-generating property owners must seek claims for property depreciation tax deduction linked to the structure of building along with plant and equipment assets.

2. Claim cost of schedule:

A depreciation schedule has got a one-off expense that continues until the life of the property or for forty years. It will ensure that the owners have claimed their respective depreciation entitlements precisely.  It is worth noting that the cost of the depreciation schedule is 100% tax-deductible. One of the major benefits of securing a depreciation schedule prior to June 30 is that investors can claim the fee straight back that financial year. Investors must estimate tax returns in a precise manner.

3. Partial year claims:

In the case that you purchased an investment property and are waiting for the next financial year for claiming a deduction, you may miss considerable savings. Investors will be able to claim partial year deductions for the tenure in which they acquired their properties before June 30. The depreciation values of assets are precisely adjusted in accordance with the period during which it was owned. For instance, if the property was owned or rented for six months, the owner can get 50% yearly deductions.

Conclusion:

Investors must arrange a depreciation schedule at their earliest convenience. Deppro quantity surveyors have expertise in preparing depreciation schedules that save our clients lots of money.

A Quick Guide to Clear All Your Queries about Capital Gains and Property Depreciation

There are many questions that come to mind associated with tax depreciation report. You may often hear people asking how to claim their reductions? How to make the most of it? There are many such interrelated queries that investors have in their minds. So here in this article, we will take you down through a few questions that will clear all your doubts.

What is exactly property depreciation? Is it beneficial?

Property depreciation can be thought of as the depreciation of value on a building or property owing to the wear and tear that naturally occurs over the years. But property depreciation is not bad at all times; in some cases, it can reap benefits for you. When you have to pay taxes, property depreciation can be a boon that allows you to claim for property investment returns which means fewer taxes to be paid at the end of the year.

Capital works and its association with CGT

Capital works can be claimed on the building structure, which includes walls, roofs, bricks, electrical cables, tiles, etc. Claiming for capital work deductions can help in lowering the value of the base of your possession, which is further added to the capital gain. Thus you can expect a rise in the CGT amount, which becomes applicable during the sale process.

CGT and equipment depreciation

Many might not be aware of this, but you can even claim depreciation deductions on removable plants and mechanical equipment. Yes, you have heard it right, when you plan to sell your property, the profit or loss percent is computed separately on such items. You can seek assistance from tax depreciation quantity surveyors at Deppro to become more acquainted with the details. If the depreciation asset’s termination worth is higher than the cost then, you get to have a capital gain. On the other hand, the reverse case applies to incur a capital loss wherein the cost is higher than the termination price.

Can investors file for a discount?

A business owner who has invested in a property for more than a year stands eligible for a 50% CGT exemption. But, it is mandatory that they hold the property for more than a calendar year from the date of signing the contract.

Does property depreciation claim add to capital gains?

Yes, one can claim for equipment deduction and capital works at marginal taxable rates. Being in possession of a property for a period greater than 12 months makes you eligible for claiming a 50% deduction while selling your property. This implies that only half your property value is carried further for CGT, enabling you to file for capital work deduction claim. This will bring in some additional cash flow to your account, allowing you to be confronted with better opportunities for investments and to reduce the burden of your loans.

Types of CGT exemptions for people who reside in the property

If you are someone who dwells in the property, then you are excused from CGT as long as you use that property for your residence. Also, the land should not be more than two hectares. On the other hand, if the owners rent out the property to someone else and consider moving out, then the CGT exemption can be filed for about six years. But there stands a condition that such people should not purchase or own any other residential place.

Conclusion:

So these were a few things that you need to know as an investor to claim for property tax deductions. If you have more such questions haunting your mind, do let us know! We are here to help!