What Is a Quantity Surveyor?

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If you want to maximize the tax deductions on your investment property, quantity surveyors are extremely important. Often, your mortgage broker or accountant may advise you to see one. A quantity surveyor specializes in assessing and calculating the costs of the construction of a property. The specialization extends to council approvals, bank lending, arranging payments, ordering construction materials, and the like. But, what many property investors need from quantity surveyors is the preparation for tax depreciation, including the creation of depreciation schedules and providing cost estimation.

So, what is a quantity surveyor?

Quantity surveyors are among the important financial advisors in the world of construction, rental property, and tax. A big part of their job is to keep track and estimate the costs of a construction project starting from planning to completion. They determine the number of materials necessary for real estate development as well as their prices.

Quantity surveyors are qualified to produce tax depreciation schedules for property investors both in the commercial and residential sectors. For example, they evaluate the assets on the rental property depreciation Melbourne, including the fittings, fixtures, and the building itself. When seeking to maximize your return on investment property, they are the depreciation experts you should have on your team.

How can a quantity surveyor help you in tax season?

Property investors usually gather the necessary documents and receipts as tax time comes near. They either consult with their accountant or submit their tax return online. They think that that is the only thing they need to claim their deductions. However, it often leads to failing to claim the available tax deductions from their investment properties. This is because they are not aware that they can claim for the building depreciation and the assets inside.

When it comes to cost estimation of items in your property, the Australian Taxation Office has strict guidelines in submitting depreciation reports. Words will not make ATO believe you or your accountant. There is a tax ruling that investors may assess depreciation on their properties, but only if they hire a qualified quantity surveyor to do the job. Therefore, if you have a quantity surveyor to evaluate your investment value, it means they will also break down your depreciation schedule.

When should you use the services of a quantity surveyor?

While a quantity surveyor is a valuable financial expert, there are specific times when you should engage with them. For one, when you are setting on a major property renovation or building a new structure, make sure to find a quantity surveyor. Also, if you are a first-time property investor, you need a quantity surveyor to determine the value of the entire building, including the assets that you can make a claim to.

As a property investor, it is beneficial to your cash flow to be able to claim maximum tax depreciation deductions. With this, you need a comprehensive schedule of depreciation for each of your property if you have multiple. Moreover, the expertise of a quantity surveyor is quite helpful if you are making significant changes in the portfolio of your existing investment property.

What does a depreciation schedule consist of?

When you request a schedule from a quantity surveyor, you should get a report that covers 40 years, comprising the summary of the deductions. The professional usually uses a few methods such as diminishing value, prime cost, and instant write-off. Low-value pooling, in particular, is a method that enables you to maximize plant and equipment depreciation.

In case you own the investment property with another person, you may ask the quantity surveyor to give you a split report, indicating the percentage of interest of the assets inside the property of each investor. It is best to have a tailored depreciation schedule based on your situation.

What are the advantages of using a surveyor?

When you have a quantity surveyor on your side, your investment property can avoid mistakes and risks due to informal calculations and rough estimates. What you need is an accurate cash projection so there are no costly surprises, for example, overpaying for materials during construction. Having a cash flow projection also allows you to plan the budget accordingly.

Among other things, a quantity surveyor can help you save money by uncovering opportunities that will likely go unnoticed if you do all this by yourself. Keep in mind that a surveyor can help you get the claim you rightfully deserve.

The Pros and Cons of Buying a Second-hand Investment Property

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Planning to buy a property is always a brain-storming task. It doesn’t only involve financial planning but many other factors too. The location, neighbourhood, facilities nearby, price, property-size, architecture, etc. are such factors. However, buying a second-hand property is tricky, if the property is only for investment purposes. For a novice or a new buyer, the task could be messy and worthless. So, if you are about to buy a second-hand investment property, Deppro review is the need of the moment.

While planning for an investment property, a buyer must have many questions and queries in mind. Moreover, as an investor, portfolio appreciation is the main factor whether the property is new or second-hand. The economic health of the area, government policies, loan-facilities are some deciding factors for a profitable investment in second-hand property.

To ease your mind and make the decision easy, Deppro comes with the pros and cons of buying second-hand property for investment purposes.

The cons of buying a second-hand investment property

  1. Lower Depreciation Deduction:

In Australia, some legal changes on Division 43 (Capital Works) and Division 40 (Plant and Equipment Asset) are now affecting the depreciation deduction on the property purchased after May 2017. It’s better to check the house depreciation report before buying a second-hand property for any purpose.

In a nutshell, the second-hand property (plant and equipment asset) is intangible for depreciation. Also, the capital works deductions are not available for buildings built after 15 September 1987. In a layman’s language, one might get the lower depreciation deduction on the second-hand property compared to first-hand property.

  1. The Higher Cost of Repairs and Maintenance:

It is obvious older the property higher is the repair and the maintenance cost. While keeping the quote in mind, buying a second-hand property needs some pre-research. The foremost is the safeguard of the property against wear and tear. Then, comprehensive building inspection, updated condition reports, and past-renovations also matter.

In Australia, you can contact Deppro for a detailed building inspection and accurate maintenance cost.

  1. Probable lower rent:

It is quite usual for a tenant to look for a new property. Second-hand properties have their prerequisites that are hard to ignore. Because of low demand, the second-hand properties have lower rental rent.

But rent also depends on various other factors. A second-hand property in a premium locality can fetch even great rent than a new property in a shabby area.

The pros of buying a second-hand investment property

  1. Cheap Buy:

Buying a second-hand property has benefits as well. It is cheaper than a new property. The buyer need not run for the amenities. Sometimes, such a buy is necessary for a diversified portfolio.

  1. Availability of Basic Resources:

A new property needs every resource from scratch, whether it is an electricity connection or a Wi-Fi setting, water connectivity, or basic interiors. Now, the perk of buying a used property is, it has already these facilities.

So, for a concentrated-investment strategy, such properties are good in terms of budget and cost reduction. In Australia, a buyer can anytime dial the Deppro contact number for genuine advice.

  1. Easy to renovate:

A new property already comes with many modern amenities. It’s a costly affair to renovate it according to the buyer’s choice again. But an old property has options to renovate and convert it into a dream project without thinking much of the cost.

Also, a little investment in second-hand property can return the high profit in the future even, after depreciation deduction.

Deppro helps in depreciation deduction and tax on every type of properties

Deppro offers the most genuine bits of advice and helps for depreciation for tax purposes. One can order a tax depreciation report anytime online or ask for a professional.

Deppro tax report is always accurate and seamless. The experts here can help you in new and second-hand both types of properties at your convenience.

Three Most Common Depreciation Mistakes Investors Do

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Depreciation has emerged as a complicated topic with some particular rules, depreciation rates, and different claiming methods among others. Investors may find claiming depreciation on property a complicated job. Some investors believe that if they perform the job of claiming depreciation on their own they will be able to save some money. Instead, they must seek the services of depreciation experts to prepare their tax depreciation schedule.

Given below are the three most common depreciation mistakes committed by property investors and how a quantity surveyor can become their savior here:

1. Overlooking claimable items:

It has emerged as one of the biggest mistakes often committed by investors. Property investors fail to obtain expert advice and miss several depreciable items every year. ATO has listed a whopping 6000 depreciable plant and equipment assets and therefore investors may overlook many common household items that carry some deductible value.

If you want to ensure that these household depreciable items do not get missed, it is ideal to seek the services of expert tax depreciation quantity surveyors. The Quantity Surveyor will then create a depreciation schedule. The schedule will include every claimable object available in the building structure and its fixtures and fittings. The depreciation schedule will cover the capital works allowance deduction that may include floors, ceilings, walls, etc. It will also contain the plant and equipment depreciation for the conveniently depreciable items like hot water systems and blinds.

2. Property is way too old:

Nearly all property investors who bought their property second-hand or after 2017 may think that it is not eligible for depreciation deduction. This is as a result of the law that has made a few second-hand properties ineligible for depreciation deductions. These property investors must cross-check such information prior to believing it and must not rule out depreciation with such ease.

It is worth noting that there are still tens of thousands in depreciation deduction on used properties. Also, second-hand property owners are still allowed to claim every eligible capital works deductions. After calculating these depreciation deductions on second-hand properties, they should prepare a detailed tax depreciation report.

3. Do it yourself schedules:

DIY schedules may be saving some money for the investors but it may also cost them thousands in the longer run. They may miss precious deductions and may end up making huge errors. If they go on to claim the objects incorrectly they may face severe outcomes. For instance, regular lightings like light shades fall in the category of plant and equipment assets. And, it has an effective lifespan of five years along with a diminishing value rate of 40%. Property investors may believe that all lightings will come under this category but it is not the case always. Downlights will come under capital works and carries an effective life of 40 years with a depreciation rate of 2.5%.

Wrapping Up:

Investors should be highly vigilant when it comes to claiming depreciation deductions. They should hire an expert Quantity Surveyor to calculate depreciation on rental property. As the tax depreciation schedule will remain for the lifetime of the property, it becomes imperative to keep it right from the beginning. There are several co-owners who may calculate depreciation first and then take the decision of splitting deduction on the basis of ownership percentage. So you must seek professional services to avoid such mistakes.

How Can I Use Homebuilder Grant for Renovating My Investment Property? Find Here

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Ever since the announcement of HomeBuilder grant worth $25,000, property investors are curious to discover every vital detail about it. Property investors are keen to know if they can utilize the grant for renovating or extending their investment property. Tax return Australia covers the financial year from 1 July to 30 June and become due by 31st October every year. Property investors desire to find out if they renovate their bath area or kitchen, what kind of tax depreciation deductions will be claimable. It is worth noting that property investors will not remain eligible for HomeBuilder grant in case they purchase a brand new house. Additionally, trusts and organizations that own residential property will also not remain eligible for HomeBuilder grant.

Here are some vital details about HomeBuilder grant:

What is HomeBuilder Grant?

As of now, the Australian Government has decided to help the residential construction industry. In its bid to assist the industry, the country’s government announced the creation of HomeBuilder grant worth $25,000 for first home buyers and owner-occupiers. According to treasury.gov.au, if you shift to the property as your main place of residence soon after renovation and meet all the eligibility criteria, you will get the grant. You may seek the help of professionals to calculate the yield on investment property.

How to Access HomeBuilder Grant?

If you want to access HomeBuilder grant, you must fulfill some conditions. You must be a natural person (no commercial goals) and aged 18 years and above. You should be an Australian citizen. You should belong to one of the two income caps given below:

  • $1,25,000/annum for the individual applicant based on their 2018-19 taxable income, or
  • $2,00,000/annum for a couple based on combined 2018/19 taxable income.

You must enter into a contract from June 4, 2020, up till December 31, 2020, to construct a new home as the main residence place. Here the property value of the house and land must not exceed $750,000.

If you renovate an existing house as the main residence place where renovation contract is more than $150,000 and does not go beyond $750,000. Additionally, the value of the existing property must not exceed $1.5 million. And, finally, you should be able to prepare your property report effectively to reduce your tax liability.

Can You Use Homebuilder Grant to Construct a Granny Flat?

The HomeBuilder grant will not be allowed to use for making any additions to your main residence place. The grant will not be used for structures like granny flats, garages, sheds, swimming pools, etc.

Conclusion:

You should apply for HomeBuilder grant by December 31, 2020, to the concerned Revenue office. You must hire a professional to prepare your tax depreciation schedules and reduce tax liabilities. Property investors will not be permitted to use HomeBuilder grant for a future investment property renovation. However, you will still be able to claim significant tax depreciation deductions from your renovation. You are eligible to claim tax depreciation for former owners’ renovation. Meanwhile, if you rent a room at your main place of residence, you can utilize HomeBuilder grant for your renovation.

Tax Deductions – Tips for Individual Real Estate Investors

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Planning to invest in the real estate sector? Looking for tips that can help you in tax deductions? Mentioned below are a few tips for Individual Real Estate Investors:

Property Taxes and Insurance:

Any expenses incurred on rentals of Property taxes and insurance are termed as deductions. In the event that you purchased your rental with traditional financing, you are most likely making property regulatory expenses and protection costs on a month to month premise into an escrow account. It’s imperative to acknowledge that the installments into escrow accounts are not really deductible. Rather, you can just deduct property assessments and protection when paid out of escrow. Have a look at the federal tax depreciation schedule for some more tax deduction tips.

Property Depreciation and Tax Deduction:

Devaluation is a yearly conclusion that is conceded to venture land proprietors or proprietors of equipment utilized for business purposes. You may be confused as to why your property deteriorates when in reality the land value increases. While the facts demonstrate that the estimation of the land and the building has verifiably appreciated over time but, you got to think from a micro level as well.

The estimation of your rooftop, for example, diminishes after some time as it decays each passing day. Deterioration tracks the value loss every year. The interesting thing about devaluation is that you don’t need to pay out-of-stash for it every year. Rather, you pay for everything forthright when you purchase the property. Thus, it helps in tax deductions.

Repairs:

Firstly, you will get the full Property depreciation and tax deduction (reserve funds) from the findings in the present year.

Secondly, since the cost is a repair, the cost isn’t a change and deteriorates over various years.

You can save on tax deductions on amortizations, maintenance, education, meals, travel, and home office.

The amazing tax benefits from rental properties you probably forgot about

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Thinking about tax is much more fun when you’re thinking about tax benefits. Property investment is a tricky game to play, but smart investors reap the rewards when they remember to claim on the below items.

 

Tax depreciation

The tested-and-true method, and Deppro’s speciality. Getting a tax depreciation schedule ASAP is a guaranteed way of earning back the money from your portfolio. It’s one of few tax benefits that doesn’t discriminate.

It’s best for the quantity surveyor to do their inspection before the tenants move in. When the investor does renovations, they’re obliged under ATO law to tell the surveyor how much was spent. Measures like this make sure that the maximum benefits are awarded.

The depreciation fee is a tax benefit; it’s fully deductible!

Capital gains tax

Yes, there are some benefits to capital gains tax, particularly thanks to the exemptions available!

It’s not available to your entire property portfolio, typically the exemptions apply to the home you actually live in. You can get a full exemption if you live in the home for at least 6 months after buying and can prove it’s your primary residence.

Another full exemption is possible if you own the home but have to move thanks to special circumstances. You can lease out the house during this time for a maximum of six years before you have to pay some CGT.

 

Claim against the mortgage

You probably think that ‘mortgage’ and ‘tax exemption’ don’t go together in the same sentence but it’s possible! But tax benefits like this come with conditions.

Investors with interest-only loans can claim against it come tax time. Interest is the money you’re making on the house/commercial space. 

 

General upkeep fees

It’s the owner’s responsibility to make the property presentable. Because these services are of benefit to the rental property they’re possible to claim. Examples of maintenance fees include cleaning, fixture repairs, pest control, gardening, and more.

 

Management costs

You have to spend money to make money as the saying goes. Real estate advertising and fees paid to the property manager can be claimed as tax benefits alongside other management costs. Some of these are overlooked and owners potentially miss out on thousands.

  • Body corporate
  • Council fees
  • Land tax
  • Legal fees

Cleaers, real estate services, property management services…all eligible for tax benefits

 

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3 underestimated real estate tools you need to up your game

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Real estate is a game that’s brutal if you don’t know how to play it. Some investors are naturals, others learn from their mistakes and go on to build a successful portfolio. There’s plenty of different strategies and tools out there at your disposal. Here we list three that you’re maybe not taking advantage of, but very well should be.

 

  • Depreciation schedule

It’s said up to 80% of investors don’t know they can increase their income through depreciation. This is hundreds of thousands of dollars that’s not in your bank account, rather, it’s going to the government through tax.

Deppro’s depreciation specialists will survey the real estate you’ve bought and get back to you with a schedule that’s got a 40-year lifespan. You probably won’t have the property for that long, but it’s long enough for you to start seeing return on your investment. Our tax depreciation services are helpful to investors in residential and commercial property. If you’re a business owner, this means you can expand, or find a larger office space, sooner!

 

  • Property manager

These guys handle the daily tasks surrounding your properties so you don’t have to. Lots of investors also take on the role of ‘landlord’, but this doesn’t always work out well. Think of the problems that come with difficult tenants and knowing how best to set the rent.

Property managers don’t have to worry about ‘emotional investment’ like the owners of the properties do. They take a critical approach to screening tenants, how to set the rent (and adjust it), handling leases, and evicting troublemakers. You’ll find managers specialising in many areas of real estate, from commercial offices to apartments and homes.

 

  • Investment companies

These companies are made by investors for investors. They offer support services like educational seminars and specialised searches for real estate and property managers.

Property Club is an example of an investment company that encourages support, rather than competition. Of course, real estate is a competitive game but investment companies will have your back through your journey. Property Club has exciting events like property tours, access to expos, and other events like research and education seminars. There’s a further subset of clubs that members can join when they meet certain criteria.

These three tools are often overlooked but extremely beneficial. They save investors time, money, and emotional burnout. They’ll certainly make your investment game a lot stronger.

Rental property depreciation mistakes to avoid

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Rental property depreciation is a bit of a mouthful but it’s an essential part of owning an investment property. Everyone makes mistakes when it comes to complicated tax matters, and that’s the reason why clients come to Deppro for professional help. We list a few common mistakes (plus more here) so you can avoid them.

 

  • People don’t depreciate. Ever.

80% of property investors neglect having their rental property assessed for depreciation. This mistake costs them thousands of dollars over the time they own the house, with the money they could earn going back into tax instead.

Deppro calculates that getting a depreciation report can earn investors back  60% of the property’s purchase price. These funds are often used to save for future properties.

 

  • Confusing the categories

The deprecation specialists place items of value into two categories: plant and equipment, and capital works.

Plant and equipment: The owners often move these into the house when they buy it, and they can be removed just as easily. Items in this category include:

  • Hot water systems
  • Air-con units
  • Furniture
  • Whitegoods
  • Curtains

The other category is capital works. These items are built into the house. They include:

  • Cupboards
  • Clotheslines
  • Fences
  • Timber (decking)
  • Bathroom fixtures

There’s more information from the ATO about assets eligible for depreciation in this PDF.

 

  • People overlook potential deductions

Investors make this mistake a lot because they don’t know what they can claim. This all adds up to a larger depreciation on the report the new owner receives. Claimable items include something as large as a swimming pool to something as innocuous as a smoke alarm. These potential deductions leave investors out of pocket when they’re not claimed.

If you’re an investor and don’t have a depreciation schedule, you’re missing out on thousands of dollars in returns every year. Those who do have a schedule are liable to make mistakes, like confusing what item goes into which category. To avoid mistakes like this, get an expert like Deppro on your side to take the guesswork out of rental property depreciation.