Save 10% With DEPPRO: Save Money on Depreciation

Are you a small business owner who is struggling to save money? Did you know that you could save with property depreciation? Ideally, real estate depreciation on a rental property can lower your taxable income. Consider that annually the government deducts your assets depreciation amount from the assessable income to determine the taxable income. If you invest in properties, property depreciation allows you to deduct the property’s cost from the taxes required to buy and improve the property over its useful life. As such, tax depreciation enables property owners to lower the taxable income in the process.

What Type of Property is Depreciable? 

Rental property owners use depreciation to deduct the purchase price and the cost of property improvement from the tax returns. However, it is worth noting that the depreciation happens as soon as the property is ready for use as a rental. Also, you can only depreciate the value of the building and not the value of the land. In that regard, you have to separate the value of land from the value of the depreciable property.

Rented properties can be a depreciation expense, as can the improvements made to the property. However, property maintenance does not count towards the annual depreciation, so you cannot write off regular maintenance.

Here are important factors to keep in mind when determining the rental property depreciation:

 

  • You must be the property owner. This is regardless of whether you borrowed a loan to purchase the property or you are still repaying the loan.
  • The property should be put into income-generating use and not be your primary residence.
  • The useful life of the property should be determinable.
  • The property should exist for more than 12 months.

Note that you will not qualify for the property depreciation if you got rid of the property in the same year you purchased it. In that regard, wholesaling and house flipping does not qualify for property depreciation.

Tips to Maximize Cash Flow Through Property Depreciation 

A smart way of investing in property is not just about capital growth and high rental yields but also maximizing cash flows. One of the strategies through which property investors can maximize the cash flow is through tax depreciation. Tax depreciation is the only deduction that can be subjective. Here are some essential tax depreciation tips to help property investors.

  1. Maximizing the Cost of Property Construction

When calculating the depreciation on a property, you must use the cost of constructing the property. Owing to the current economic status, many property buyers are buying buildings at reduced prices nearer the original cost of constructing the property. Therefore, the idea is making the most of the current market conditions and searching for properties where the actual construction cost is close to the current purchasing price.

  1. Do Not Assume You Do Not Qualify to Depreciate the Property Based on Its Age

Even properties built in the 80s may qualify for tax depreciation. Talk to depreciation professionals near you to break down the different categories and qualifications. You may be surprised to find more than 40% of the items or equipment qualify as tax-deductible expenses.

  1. Claim the Small Items and Low-Value Items

Experts advise that property owners deduct as many items as they can. Ifit falls under the set maximum value, you can write it off. Claiming all the items is a great asset pooling strategy for your business.

  1. Use an Experienced Depreciation Professional

For first-time property owners, preparing the depreciation schedulecan be a nightmare. It helps if you engaged experienced professionals. The move will save you time and effort, so you can focus on growing your business. It is helpful you hire a company that has years of experience in calculating property depreciation.

Conclusion

Do not bother with DIY property depreciation. Contact DEPPRO for professional solutions. We have experienced experts who can ensure you earn maximum income through property depreciation. Call us today for an on-site consultation.

Tax Return & Types of Investments

Investors in Australia like to invest their hard-earned money in something that gives a good return. For this reason, a large number of people in the country invest in shares and other investment while others have invested in securities exchanges. People in Australia prefer to invest in on-exchange investments.

Investment in property has also emerged as a popular investment. The ATO permits property owners to claim ATO property depreciation as a tax deduction. Property owners can claim depreciation if they earn income from their property. The deduction helps in declining property owners’ taxable income and consequently, they pay less tax.

Here are the types of income that investors must declare:

Interest

The interest that you earn from your bank accounts like term deposits is treated as an investment income. If you have earnings from other sources such as penalties from any of your investments, these should be declared. Also, if you get interest from your children’s saving account, you must declare it. It may include interest credited or paid by the government. Meanwhile, if you received bonuses from your life insurance, it will also be treated as an investment. You will be allowed a 30% tax offset out of such bonuses. You can hire experts to get your property valuation done effectively.

Dividends

Shares can be described as yet another form of a dividend. When you declare your bonus shares and the company from which they came, you should provide a statement that will validate that these shares are a dividend. The company may be either a public trading trust, corporate unit trust, or listed investment business. There will be dividends with imputation credits in some scenarios and you must declare them on your tax return. It is worth mentioning that a share trader will be taxed differently from other investors. If you happen to be a share trader, you will be permitted to claim your losses as a tax deduction. For regular investors, the deductions shall be made on their capital gains. You should always hire an expert quantity surveyor to prepare your ATO tax depreciation schedule.

Managed investment trust

You must always specify any income generated from a trust investment product on your tax return. Some instances include money market, unit trust, cash management, and mortgage trust, among others. These kinds of trusts are considered investment income.

Capital gains

Many people struggle with this. Capital gains can be described as the difference between the amount you paid for a particular asset and the amount you sold it for. There will be some scenarios where you make a capital gain for a managed fund such as share trust, equity trust, or growth trust if it provides you a capital gain. Capital gains are usually included in your entire income and aren’t considered as an individual income, they will be taxed similarly.

Conclusion

Your return for all kinds of investments must be an integral part of your regular tax return. The process may be different depending on the kind of investments you have. If you have earned dividends, they will get added to your taxable income automatically. You can hire Deppro quantity surveyors to calculate your taxable income. You will also get a tax statement from your broker at the end of every financial year. The statement will include the total profits you have earned during that period. If you have filed your own tax return, make sure to include your entire profits in the report.

Significance of Tax Depreciation for Property Investors

Tax depreciation plays a vital role for property investors. It can significantly enhance cash flow for them when they prepare their property depreciation report effectively. They can also bring down their payable tax. The goal of an individual is to bring down tax liabilities and it can be achieved by claiming tax depreciation. And, when you desire to maximize your cash flow, you can, once again, do so by claiming all existing tax deductions.

Let’s understand the importance of tax depreciation for property investors with the following questions and answers:

Why You Must Claim Tax Depreciation Deduction?

Tax depreciation deduction, in combination with other existing tax deductions, can bring down your tax payable thus leaving more money in your pocket. A large number of investors are aware that they will be able to claim a tax deduction for property management fees, interest, repairs, and maintenance. However, some of them end up missing out on claiming tax depreciation deduction. As interest rates are quite low, tax depreciation deduction can significantly emerge as one of the major deductions claimable. They should effectively get their investment property depreciation schedule prepared with the help of reliable professionals. Depreciation deduction will bring down your taxable income and assist your property return a positive cash flow.

Will All Property Investors Require a Tax Depreciation Schedule?

It is imperative to investigate obtaining a tax depreciation schedule if you are keen to enhance all your capital allowance and tax depreciation. Owners of qualifying residential property or commercial space must order a tax depreciation schedule if they plan to claim one of their major tax deduction. You must also need to find out if your investment property qualifies or not. You may hire leading professionals who may carry out an estimate of tax depreciation deductions available for you.

How You May Claim Your Tax Depreciation Deduction?

The most convenient way to claim tax depreciation deduction is to get a tax depreciation schedule prepared from quantity surveyor tax depreciation. He will prepare your tax depreciation schedule for your accountant so that he may apply it at the right time. It is worth noting that your accountant is not eligible to assess the construction cost for generating this deduction for you. Some property investors are not aware of whether they need to pay for their tax depreciation schedule every year. It is important to note that they are not required to pay for it every year. It is because it is a one-time investment that remains completely tax-deductible in the year you buy it.

Conclusion:

Tax depreciation holds great significance for property investors. You also need to get your depreciation schedules for rental property prepared from quantity surveyors. Free updates are allowed to be made where you have replaced, added, or improved assets or carried out small improvements. In case you have just completed major works and estimation is needed, you may have to pay a fee. You must not become such a property investor who fails to claim one of the biggest tax deductions available.

Important Things to Consider While Claiming Property Depreciation

The property tax depreciation schedule is not just restricted to the professionals. Anyone purchasing a property for the purpose of generating income will be allowed to depreciate both items within the building and the cost of the building. And, the savings will be huge. Before you move ahead, it is important to find the meaning of property depreciation. A property investor will receive two types of allowances. These are depreciation on plant and equipment and depreciation on building. Plant and equipment includes items inside the building like ovens, dishwashers, blinds, and carpet, among others. The building allowance includes the construction of the building itself. It will include expenses like timber, brickwork, concrete construction, etc. These expenditures are permitted to be offset against the assessable income.

So, discussed below are the important things you must consider when claiming property depreciation:

How Will A Depreciation Schedule Assist You?

It is not at all complicated. A depreciation schedule will go a long way in helping you pay less tax. Your taxable income will be lowered by the amount that the depreciation schedule states. Depreciation can be described as a non-cash deduction, as it has emerged as the only deduction that you are not required to pay for. The deductions are included within the purchase price of a property. The remaining deductions like interest levies are expenditures that may hurt your pocket on a regular basis. You can hire professionals to calculate the tax depreciation cost precisely.

Is Your Property Too Old for Claiming Depreciation?

If your residential property happened to be constructed after July 1985, you may claim both building allowance and plant and equipment.

Who Can Prepare a Depreciation Schedule Report?

It is worth noting that real estate agents and property managers aren’t permitted to prepare a depreciation schedule. If your residential property was constructed after 1985, your accountant will not be permitted to assess the construction costs. ATO has recognised Quantity Surveyors as qualified to assess the right estimate of construction costs where those costs remain unidentified. Quantity Surveyors are specialists in the precise assessment of construction costs and they can maximize an investor’s financial position pertaining to their property assets. The Quantity Surveyors can also determine the tax depreciation life of your property.

Do Quantity Surveyors Need to Make an Inspection of Your Investment Property?

Site inspections have turned out to be crucial in meeting the requirements set by ATO. A professional Quantity Surveyor will make sure that all depreciable items are included and photographed. It will ensure that you do not miss out on any deductions. The documentation will then be used as proof in case of an audit.

Conclusion

You must remember the above things when you set out to claim allowable depreciation on rental property. If your property has been renovated, you must find out how much you have spent on the renovations. This is an obligation set by ATO. In case the previous owner carried out some renovations, you will still be able to claim depreciation. And, if the cost of renovation remains unknown, a Quantity Surveyor will be entitled to make that estimation.

Top Depreciation Claims for Property Owners in Australia

There are various ways in which landlords can save money when paying their annual taxes. But in most cases, they end up paying hefty taxes due to a lack of information about the eligibility of filing depreciation claims.

Here in this post, you can see the top tax deductions that you can claim for your property:

1. Installed appliances depreciation

If you have installed appliances at your home, such as dishwashers, air conditioners, washing machines, etc., the owners can consider claiming deductions based on the effective life of the appliances.

2. Maintenance and wear and tear

If you have spent a sum on the upkeep of your property, you can claim depreciation for the building based on the amount invested. May it be a broken roof struck by a storm or a broken window due to a tree fall, all can be put up for a property depreciation claim.  

3. Strata title

People who are in possession of multi-storey apartments and subdivisions, stand eligible for strata title. Holding a strata title makes the owners eligible for claiming the amount that they paid as corporate body charges. The body corporate fee is levied on owners who own apartments, multi-story buildings, duplexes, townhouses, etc. Also, the owners can put up a depreciation petition for maintenance and garden development in such cases by including them as strata fees.

4. Property loan interest charges

If you have required a property loan when buying your property, the interest amount levied on the same can be filed for tax depreciation. The principal amount cannot be claimed, but the interest amount for the full loan is eligible for Deppro depreciation.

5. Building depreciation

If you have made any renovations to your building, you can claim the same on your property. Buildings that have been built on or before the 16th of September 1987 do not stand eligible for depreciation claims. However, buildings that have been constructed after that date are eligible for a depreciation claim. All you need to do is hire a professional who will make use of investment property calculator to come up with the best cost-cutting solutions.

6. Cost of advertisement for a rental property

If you are planning to rent out your property using any of the advertising methods such as brochures, print media, signboards, etc., then we have good news for you. Now you can claim the advertising cost that you have invested to rent your property to a tenant.

Conclusion:

To gain a better understanding of the depreciation rules, you can consider seeking advice from property depreciation consultants.

Top Depreciation Claims for Property Owners in Australia

There are various ways in which landlords can save money when paying their annual taxes. But in most cases, they end up paying hefty taxes due to a lack of information about the eligibility of filing depreciation claims. Hiring experts can help them go a long way in saving taxes leading them in a win-win situation.

Here in this post, you will get to read a list of the top tax deductions that you can claim for your property:

1. Installed appliances depreciation

If you have installed appliances at your home, such as dishwashers, air conditioners, washing machines, etc., the owners can consider claiming deductions based on the effective life of the appliances.

2. Maintenance and wear and tear

If you have spent a sum on the upkeep of your property that occurs due to wear and tear, you can claim depreciation for the building based on the amount invested. May it be a broken roof struck by a storm or a broken window due to a tree fall, all can be put up for a property depreciation claim.  

3. Strata title

People who are in possession of multi-storey apartments and subdivisions stand eligible for strata title. Holding a strata title makes the owners eligible for claiming the amount that they paid as corporate body charges. The body corporate fee is levied on owners who own apartments, multi-story buildings, duplexes, townhouses, etc. Also, the owners can put up a depreciation petition for maintenance and garden development in such cases by including them as strata fees.

4. Property loan interest charges

If you have taken a property loan while buying your property, the interest amount levied on the same can be filed for tax depreciation. The principal amount cannot be claimed, but the interest amount for the full loan size can be put for Deppro depreciation.

5. Building depreciation

If you have made any renovations to your building, you can claim the same on your property. Buildings that have been built on or before 16th September 1987 do not stand eligible for depreciation claims. On the contrary, buildings that have been constructed after that date can be put for a depreciation claim. All you need to do is to hire a professional who will make use of investment property calculator to come up with the best cost-cutting solutions.

6. Cost of advertisement for a rental property

If you are planning to rent out your property using any of the advertising methods such as brochures, print media, signboards, etc., then there is some good news for you. Now you can claim for the advertising cost that you have invested to rent your property to a tenant.

Conclusion:

There are various other depreciation claims that you can make apart from the ones mentioned above. To gain a better understanding of such claims, you can consider seeking advice from property depreciation consultants.

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.

Tax Deductions That Property Investors Can Claim

When you seek to achieve financial freedom, an investment property can be an attractive proposition. And, investment property comes with tax benefits. A landlord gets several options to bring down their annual tax bill. A large number of times, these deductions are the difference between a negative cash flow and a positive cash flow. Investors are eligible to claim deductions on their property for the period/s in which it was rented. And, they can claim a deduction for the portion of an expenditure that was used for business purposes. Therefore, they should calculate depreciation on rental property and prepare a record to prove all these details.

Here are the top tax deductions that property investors can claim:

1. Loan Interest:
Investors will be eligible to claim the interest levied on a loan for an investment property. They can also claim interest on any bank fees for servicing that loan. For instance, if you happen to incur $20,000 interest on your loan and $200 in loan fees, you can always claim them on your personal tax return.

2. Rental Advertising Expenses:
Landlords make efforts to find tenants and spend money on various types of advertisements. If you advertise your property using various online tools, brochures, and signs, you can claim them in the same year.

3. Land Tax:
If you have a rented home on your investment property, you use the land tax as a deduction. The tax and the timing may differ between states; the timing will decide when you can claim the cost. You may consult the tax advisor of that particular state to get an idea of the estimate tax returns. He will also let you know that you have claimed the right amount in the right year.

4. Strata Fees:
If your property happens to be on a strata title, you can also claim the cost of body corporate fees. If the fee includes garden expenditures and maintenance, you won’t be able to claim these expenses separately.

5. Capital Gains Tax Discount:
If you made a capital gain by selling the investment property, you must pay tax on profit. If you purchased and sold the property in a period of 12 months, the net capital gain gets added to the taxable income. It will raise the amount of income tax you will be paying. If you had possession of the property for more than a year before selling, you will get a 50 percent capital gains discount.

6. Building Depreciation:
Depending on when your property was constructed, you can claim a deduction on the depreciation of the building structure. You can also claim a deduction if you undertook any renovation on the property. You should have a clear idea about the allowable depreciation on rental property.

7. Stationary and Phone Expenses:
If you are a landlord, it is similar to running a business venture. You can claim deductions on phone costs, internet, electricity, stationary, etc. But, you must claim for that portion of these expenditures that relate to the investment property.

Conclusion:
You must have a clear idea of the various deductions that you can claim. As per the record of ATO, there are 1.9 million property investors residing in Australia. The country has a whopping 2.7 million rental investment properties. Every year, many property investors miss making claims of allowable tax deductions. It happens because they lack the awareness of all the expenditures they can claim as tax deductions. As a property investor, you should be aware of the tax deductions and Deppro depreciation to make the most of your investment property.

Best Reasons to Invest in Commercial Property

Most people dream of owning their own home. Those who can cross that first hurdle, often go on to their second or third home. Obviously, they do not plan to stay in all of them by turns. The subsequent purchases are for investment purposes only. They give the owner the option of renting or selling it outright for a profit. Additionally, whether you rent or sell, it also gives an option of claiming depreciation on property. There is another option that is popular with investors – commercial property. In this post, we are going to try to help you understand the implications of commercial property investment.

Tax Benefits

The first thing any investor looks at is whether a particular investment brings any relief from tax. A commercial investment property offers tax deductions in two ways. The first is on the capital works expenses made on immovable parts of the property. The second is the depreciation due to plant and equipment. This refers to additional fixtures and fittings that you have spent money on. If you can prepare an accurate and detailed depreciation schedule with the help of a professional, you can indeed save a lot of tax.

Robust Yields

The primary reason for any investment is to sell at a price higher than the purchase price. The property tax depreciation mentioned above is only a bonus. But it is not the most important benefit of investing in a commercial property. The most important benefit is the better returns it usually provides on resale. This is especially when you compare with the average returns of investing on a residential property. This is the primary reason why discerning real estate investors always prefer to deal in commercial properties.

Low Initial Investment

We know that the rental income from a commercial property would be much higher than a residential property. In spite of this, the initial cost of a commercial property is much less. This allows you to begin investing without a very large corpus.

Conclusion:

The purpose of this Deppro review is not to compare the relative merits of investing in a commercial property vs. residential property. We only seek to highlight some of the best reasons to invest in commercial property because many of them are less known to investors. If you are an investor, then you must surely keep commercial properties as part of your portfolio.

Why the Depreciation Shake-up Gives Off-the-plan Investors an Edge at Tax Time

The year 2017 saw some changes brought about in the rules governing depreciation on investment property in Australia. The attractive option for claiming tax deductions due to the depreciation of the property value saw a cutoff date being applied – 9th May 2017. People who bought a second-hand property after date could no longer claim the deductions, as per the ATO regulations.
An Overview of Depreciation

We know that any asset undergoes wear and tear as it continues to be used. Accounting principles look at this reduction as a standard percentage of the value which gets reduced from the value of the asset. Under tax laws, this depreciation amount could be set off as a deduction from the tax payable. This would make a substantial change in the cash flows of a property owner. Based on the cost of the property, maintenance costs, reduction in value, and the reduction in tax payable, the depreciation could impact the net yield on investment property.
The New Tax Law

From May 9th onwards in the year 2017, second-hand property purchased would not attract the tax deduction. The only two categories allowable were new assets added to older homes and assets in new homes would allow admissible deductions. Those who were off this new plan could continue to claim under old rules. Also, capital works investments and fixed items added could still be claimed. But any assets that came along with the property went out of the purview of the deduction.
The Better Option between New and Second Hand

Because of this change, property owners needed to rethink their investment strategy. Back of the envelop calculations seem to present a clear picture. It was seen that a new property could work out much cheaper than investing in an older property of the same value. The detailed working of the investment property depreciation schedule ATO would provide a similar answer. What this does is to take the tax benefits out of the equation. So an investor should look at the cost-benefit analysis of the property only. Tax deduction benefits would cease to make a difference to the numbers. So how do the new tax rules affect the comparison between old and new? A property purchased in 2016 might turn out to be of similar value to a brand new property purchased in 2018. This needs investors to recalibrate their calculations carefully and in advance.
Conclusion:

In order to get the best property investment returns, an investor would need to calculate carefully. The best way is to leave it to the professionals. Consultants like Deppro could depute their qualified quantity surveyors to get the math right. They would set up the depreciation schedule according to the purchase date. The ATO has detailed lists of what can be claimed and for how much. These quantity surveyors would work out the numbers in accordance with these ATO guidelines. The amount that such a report would cost could ensure savings of higher amount if the calculations are done by a professional.