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Top Depreciation Claims for Property Owners in Australia

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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

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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.

Planning to demolish your existing property to construct an investment property? Consider these factors

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Depreciation can never be a sole factor for an investor to construct a new investment property. However, it does impact the cash flow of your property. Not to mention, an expert quantity surveyor will help you discover depreciating assets for tax purposes. Investors generally demolish their family home to construct a duplex and live in one part and rent out the other section. It may cost a little more to construct a duplex than a solo freestanding house. But it is more economical than constructing two single freestanding houses.

Here are some factors that you should not overlook:

What is a duplex?

It is a residential home that has got two units under the same roof. The two units however share a common party wall that separates the building into two different units. Each unit is considered as a separate home with its own facilities, entrance, and yard. With a duplex, there is the advantage of a greater asset portfolio and higher equity. It can help in funding future projects and lets you accomplish your property goals much earlier.

Steps in constructing an investment property

There are various steps that need to be followed when constructing an investment property. You must ensure that you have acquired experts. The house that you seek to demolish should be a primary place of residence. It should not be a family home. You need to demolish it as the duplex must be constructed on vacant land. The investor must have a scrapping report which will let the investor claim depreciation on investment property. This report will help you to save thousands of dollars by way of claiming an instant tax deduction for scrap value being decided by an expert quantity surveyor.

Development application:

An expert architect will help in designing the home for the property investor. They should also help the investor through the essential development application process with the council. In case the investor plans to construct an off the plan house, a Complying Development Certificate can be utilized instead of a DA. This will help to streamline the procedure and reduce the lag time. You must evaluate depreciation on residential rental property in a bid to make an effective depreciation claim.

Occupancy certificate:

During the process of construction, you must establish contact with the builder so that you can stay updated on the construction progress. You must ensure that the construction team are experts who have a license and previous experience. It will ensure a top-quality final product. After the project is over, it is necessary to get hold of an occupation certificate. The certificate will help in authorizing the occupation and use of a new unit. It is significant because it will ensure that the property becomes habitable.

Conclusion:

Often financial institutions or banks may make it mandatory to seek the services of quantity surveyors. An expert quantity surveyor from Deppro Victoria will also prepare the property tax depreciation schedule for the property investors. The cost reports are required by banks to understand the development expenditure.

How Multiple Owners Increase Depreciation Claims

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One of the most popular trends in the real estate world recently is co-ownership. A rising number of property investors are choosing to own properties together, and there are some great reasons behind it. Co-ownerships of properties are increasing the purchasing power, which is particularly significant in large cities. Co-ownership also relieves the burden of maintaining a property. The cost of repair and maintenance could be carried by multiple parties instead of one person.

But beyond all of this, co-ownership can also assist in claiming depreciation on property, giving a chance to depreciate more assets at a higher rate. Let’s understand how this works.

What is a split report?

A split report, as the name suggests, splits the value of the assets in proportion to each co-owner’s interest. We calculate depreciation on rental property or private property only after the split. Thus, a split report allows for tax depreciation based on the interest of each co-owner, instead of an aggregate depreciation.

The rationale behind the idea is quite clear. As we know, tax depreciation is a process where the depreciation in the cost of assets within a property is considered as another expense, thus allowing for larger tax returns. When a split report comes into the picture, the distribution of assets too is made according to the percentage of ownership of each co-owner. This increases the number of assets eligible for a write-off or a low-value pool.

The whole tactic accelerates the depreciation benefits for the co-owners, making it a very profitable technique in the early years of property ownership.

Scenarios where split report works

A split report is applicable wherever there is a scope of claiming tax depreciation on the assets of your property. Let’s try to understand how multiple owners are better than a single one.

Consider a scenario where property investors are allowed to receive a write-off on assets that have a starting value of $300 (or less). Typically, this severely restricts the write-off a single owner could get on a property. However, in the case of co-ownership with an equal partnership, each owner is allowed to claim a write-off on items with a value of less than $300. This means that the co-owners can collectively claim ownership of $600 value.

A similar tactic could be employed in case of low-value pooling. Suppose that if the interest of the owner for any asset is less than $1000 in value, the asset would be considered low-value. The owner gets a Deppro contact number and gets told that he could claim them at a rate of 18.75 percent in the first year and 37.5 percent from second year. However, when there is a 50:50 co-ownership, each owner is allowed to claim assets with interest less than $1000, thus allowing to put a total claim worth $2000.

Conclusion:

Asset depreciation is a significant tax deduction for property owners, something to consider during a Deppro review. However, this is far from the only benefit that co-ownership offers. If you are looking to invest in a property, doing so with others can hold some long-term benefits for you. Contact us today to chat about your options.

5 Smart Ways for Investors to Use the Extra Cash from Depreciation

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Do you know that you can improve your cash flow with estimate tax returns? This happens because depreciation essentially lowers taxable income which means you can foresee more precisely and put more money in your pocket at tax time. When people get this extra cash in their pocket, they tend to put this money into savings, buying a property, car, going on a holiday, or even put it towards the daily living expenses. But if you are an investor and want to use this extra cash in smarter ways, here are few options for you:

1. Pay Your Debts:

It is always best to do the necessary things rather than buying a new car etc. If you have any major debts, this is a very good chance for you to reduce or eliminate them.

2. Expand Your Portfolio:

Your financial advisor will tell you that modifying or diversifying is a great way to reduce risk and is important for your long-term financial success. When you have a modified portfolio, different investments are likely to react differently to the same event; which means, if one of your areas is suffering, you will still have another area growing. This will save you from a significant financial loss.

3. Invest in a Renovation in Your Properties:

It is always a good idea to keep your investment property prim and proper. Try to invest in high quality appliances and change the overall look with a fresh coat of paint. Using this extra cash from property depreciation tax deduction to improve your current investment property is a nice idea. Renovations obviously also boost rental returns and increase the overall property value.

4. Expand Your Business:

When you are a commercial property investor or in a business of a tenant, extra cash never goes in vain. Depending on how your business is travelling, you can use that extra cash to expand the horizon. It means expanding the business or investing in other properties for business. For example, you can buy new properties and equipment for new properties.

5. Grow Your Portfolio:

As an investor, you should never stop at one property. You will experience greater success and returns by growing your property portfolio. But you have to consider this only if this works for you and your financial situation and fits you right with your investment goals. It is always a good idea to do some research to make sure you are investing in the right area to maximize capital growth and rental returns.

Consult an Advisor

It is important to note that these are only generalized ways to invest your money in better ways. It is always best to consult Deppro quantity surveyors to determine the best course of action for your circumstances.

Bottom Line:

There are many other ways in which you can boost your cash returns from the tax return you get in your pocket. However, you need to go through the ATO tax depreciation schedule for a detailed picture.

3 Facts about Quantity Surveyors You Must Cross-check When Selecting One for Obtaining a Depreciation Schedule

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Before you purchase a property from an investment point of view, your accountant or your rental property manager will always advise you to consult a quantity surveyor, especially when dealing with  depreciation tax deductions. A quantity surveyor specializes in estimating the value of your assets for depreciation purposes. But before you deal with a quantity surveyor, you need to learn certain facts about them, which are discussed below:

1. Quantity Surveyors Are All Acknowledged by the Australian Taxation Office

As mentioned in the beginning, a quantity surveyor is acknowledged as a professional who is eligible to estimate your construction cost that can be eliminated for tax depreciation. A quantity surveyor specializes in preparing tax depreciation reports for you. They can come up with a comprehensive tax depreciation schedule that outlines all the deductions you are eligible to claim. Though these deductions vary depending on your circumstance and the type of property purchased, the construction starting date, any renovations that have taken place, and the moment you exchanged contracts to purchase the property.

2. Quantity Surveyors Hold the Required Industry Qualifications

You are advised to do a background check before you appoint a quality surveyor. Make sure he is an authentic tax agent with a registration certificate for the tax depreciation work. There is an appropriate standard of professional and ethical conduct and regulations provided by the 2009 Tax Service Act (TASA) that every tax agent and financial adviser have to obey. The Tax Practitioners Board also says that the quantity surveyors who are preparing the report must be acknowledged by the Tax Service Act 2009.

3. Ask Your Quantity Surveyor All the Questions about Depreciation Schedule

You should opt for tax depreciation quantity surveyors who can inspect the site to estimate the tax depreciation properly. If a quantity surveyor refuses to visit your property, there are high chances that they may miss evaluating some assets and henceforth will not be able to include them in the final tax depreciation report.

Bottom Line

A good quantity surveyor will cover the depreciation of all your assets in their depreciation report and will always find a way to help you claim the maximum deductions at the time of tax return. You can always check online for more information on Property Investment returns.

Bought an investment property late this financial year? Make it count, claim your deductions!

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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.

Negative Gearing: Everything You Need to Know About It

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Negative gearing is a term for describing a circumstance when money earned through an asset is less than the expenses for holding the asset. The term applies to any kind of investment. The expenses include the fees for managing the property, the interest on the investment loan, depreciation, and more. In case you hardly have the time to manage your tax return Australia, then you need to contact an accountant. So, as we check how negative gearing works, you can read ahead to know the advantages of positive gearing.

How Does Negative Gearing Work?

Whenever an investor negatively gears a particular property, he can claim the overall loss as the investment loss. The accountant considers the equivalent loss while filing tax returns. Moreover, the accountant deducts the loss from the current taxes, but with some restrictions. Even though the investors don’t aim at negative gearing, it helps them to realise long term capital gains. The loss also helps to regain intermittent losses for a short term. This, in turn, helps to pay off less loan and increase the rent till the situation changes.

Before moving ahead with negative gearing, the investors should be financially stable. This would assure them to cover up for the shortfall until they sell the property. On the other hand, in case the floating index is an aspect to calculate interest, then investors can expect low rates. If you are unable to determine the asset value for a year, then refer to the tax depreciation tables 2015.

Advantages of Negative Gearing

The main advantage of negative gearing is that it helps to reduce the overall tax. It helps the investors to focus on returns for the long term instead of cash returns for a short time span. In case the situation is not negatively geared, then it’s better to ensure that the property income is more than the expenses. This leads to manage the property in a better way and spend little on maintaining the property.

Some investors may add on that negative gearing may improve the rental affordability and impact the property supply. But, ideally, this aids to lower down the purchase price as well as the rent.

Disadvantages of Negative Gearing

Among the disadvantages, negative gearing leads to reducing tax payable. But, such a loss comes under negative cash flow. Hence, it is not appropriate for investors who wish to earn more through a passive source of income. With no extra money, the investor may lose the property due to debts not paid on time. You could claim tax refunds on rental property if you’re seeking ways to save on tax.

With the ever-changing market trends, negative gearing may lead to higher risks. In fact, the investors may have faced a lean phase when they rely only on capital gains. However, a positive cash flow assures the investor about gaining profits even when the property value declines. Later, the investor may think about reducing the limit as per their borrowing capacity. This makes it difficult to move ahead and grow their portfolio.

Conclusion:

Before making a decision, the investor must get in touch with an expert to learn more about the strategies. This can help them to pace ahead with their wealth-creating journey depending on the financial and personal goals. Once they get in touch with a professional, they don’t have to bother with the yield on investment property. They can also check out for a depreciating schedule to learn more about the tax returns.

4 Important Things That Your Tax Depreciation Schedule Must Include

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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

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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.