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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.

4 Commercial Property Depreciation Facts You Must Know

Many commercial property owners aren’t aware that they are eligible to claim depreciation on property. According to a study, approximately 80% of investors miss the benefits of their commercial property and end up losing plenty of money every year in Australia. It is imperative for all commercial property owners to claim depreciation. These deductions can significantly enhance the positive cash flow of an investor and diminish the negative cash flow. We have prepared a list of significant factors that property owners may consider in a bid to earn more from their commercial property.

Given below are the factors about commercial property depreciation:

1. Depreciation and how you can claim it:

According to the ATO, it is necessary for investors to prepare a report of their income-earning from their commercial property. This will prove useful when preparing their income tax assessment. And, property investors of commercial property are eligible to claim depreciation. Depreciation takes place when a property shows signs of wear and tear in its structure, fixtures & fittings over the years. It is considered to be a non-cash deduction which means that investors must not spend any amount to claim it. Property investors must calculate depreciation on rental property in an accurate manner to maximise their claim.

2. Life of a building:

Property owners will also be eligible to claim any latest renovations that took place since July 20 1982 snd, it doesn’t matter if it was carried out by an earlier owner. Additionally, plant and equipment depreciation can be claimed as well, irrespective of age. The instances of plant and equipment may include carpets, and ac units, among others. Expert quantity surveyors will carry out a property inspection and take images and prepare a list of additions made to the commercial property. They will offer an itemised tax depreciation schedule to property investors that include the availability of deductions for a period of 40 years. You may seek a Deppro review from our professionals, in case you encounter any confusion.

3. Depreciation of other items:

While preparing a commercial building property depreciation schedule, it may be tough to work out who is eligible to claim depreciation for specific items. Landlord and the sitting tenant will be able to claim depreciation for any fit-out made to a property. Tenants of commercial properties will be eligible to seek a claim of depreciation for any fit-out that they introduced. It may include blinds, shelving, and carpets, among others. Additionally, owners of a commercial property can also claim depreciation on any installed asset or assets left by a previous tenant.

4. Select a method:

After calculating depreciation, property investors may choose two methods for making a depreciation claim. This includes: diminishing value method and prime cost method – property investors can use either. Deductions will be calculated according to a percentage of balance you leave to subtract under the diminishing value method. Meanwhile, the deduction for every year can be calculated as a percentage of cost under the prime cost method.

Conclusion:

You must be aware of how to calculate depreciation for your commercial property accurately to maximise your gains. If you face any difficulty in calculating depreciation, use our Deppro contact number, and call our experts. They will help you calculate it accurately. You may consult their quantity surveyor as well who have achieved specialisation in tax depreciation.

Commercial Property: Frequently Asked Depreciation Questions

You may take the word ‘depreciation’ as a loss. Yes, you are right in your approach, as the real meaning is all about losses and reduction. But depreciation, in reality, stands as profitable for business owners considering their depreciation claims. Deppro depreciation is one of the significant reasons which compel people to invest in real estate. Being an investor, there are many things that one may be curious about.

So here are a few frequently asked questions that may help your inquisitive mind to get answers about the same:

What do you mean by depreciation?

We all know that when a property or building is held or a long time, its value starts facing a depreciation. Thus accordingly, the owner becomes eligible to claim for tax depreciation owing to the wear and tear caused on the property. There are basically two kinds of categories on which a discount can be claimed. The first category is plant and equipment depreciation which is inclusive of removable items of the property such as AC’s, fans, lights, etc. On the other hand, the second is capital work depreciation which is applicable to permanent or fixed assets that cannot be moved, such as bricks, windows, etc.

How to claim for depreciation easily?

The very first thing to do in such a case is to seek assistance from property depreciation consultants to design your property depreciation schedule. One is required to pay a one-time fee for availing BMT tax schedules which lays out all the eligible tax deduction criteria. Ranging from depreciation in manufacturing, retail, office towers, and a lot more, this lists down all the eligible tax deduction standards for your commercial property.

Can you calculate depreciation on your own?

Everything cannot be your cup of tea; thus, it is always better to leave such things in the hands of a professional. You can knock the doors of quantity surveyors to get such a task done with ease.

Why does depreciation stand as important?

Owners can claim a huge amount of money as a deduction in tax every financial year. So you can very well understand how this depreciation minimizes the amount of tax that you have to pay during the financial year-end. It enhances the cash return and also balances the value for operating a business or being a property owner.

Are there any age criteria for a building to claim for a deduction?

Both old and new commercial buildings can reap in some depreciation benefits for the renters and the tenants. You can also get connected with an expert quantity surveyor to gain further information about the same. Ranging from final inspections to investment property calculator, occupancy certificates, they can also help you in efficiently calculate the age of your property.

Can new property owners insist for a depreciation claim based on the renovations taken up by the previous property owner?

Yes, the professionals can take into account all the renovations done on your property and use the data for preparing your depreciation schedule. Just for instance renovations such as plumbing, electricity, and similar such things can be taken into account for qualifying the depreciation claims.

Bottom Line:

So these were a few questions and answers that you must be aware of while preparing a rental property depreciation scheduleIf you have more such questions hitting your mind, do let us know!

4 Tips to Claim Depreciation for Childcare Centres

Investors tend to show a keen interest in a property as there are enormous benefits when they file their tax return in Australia. Investors are keen to get a share in the profit of the growing real estate market.

Here are some of the reasons why childcare centres are becoming so attractive for investors:

1. Increase in depreciation schedule:

There has been a rise of 67% in tax depreciation schedules for childcare centres. The depreciation schedule has been rising consistently every year as there is a surging demand for these properties as an investment. The industry has witnessed robust growth in recent years. The fast growth of the industry has presented numerous opportunities for investors.

2. High demand for childcare centres:

There has been a high demand for childcare centres in the last few years. The main factors responsible for the sharp demand include strong rental yields and profitable depreciation deductions. However, some feel that there is an oversupply in the industry. Childcare centres have emerged to be a profitable investment. The hotspots may include suburban areas that have become famous among families. Additionally, these centres are becoming a famous option for proactive investors searching for the next asset to add to their portfolio. Among social factors, high birth rates and surging need for flexibility have contributed to the rising demand.

3. Long term agreement:

Childcare centres are largely leased out by tenants on a long term basis agreement that may last between five to ten years.  In this period, the centres offer positive rental incomes and remain a profitable asset to an investor’s portfolio. Investors can enhance their cash flow by taking benefit of the several depreciation deductions available from the many childcare centres. Childcare centres offer attractive yield on investment property that investors must not miss.

4. Huge deductions:

Reports suggest that when several depreciation schedules were prepared for childcare centres, it uncovered huge deductions over the life of the property. Owners can claim several depreciable items such as artificial grass, kitchen equipment, etc. And, tenants can seek advantage of the available depreciation deduction of their furniture, toys, and play equipment, among others. It is worth noting that owners of childcare centre have many plant and equipment assets. And, all of them offer some depreciable value.

Conclusion:

Childcare centres offer immense benefits to investors and help in lessening their tax burden. If you face any confusion while preparing the property report, you may seek the help of experts. According to a case study, owners get the opportunity of claiming $25,475 worth of depreciation deductions for plant and equipment. And, in the cumulative five years of securing the investment, the depreciation claim will total approximately $71,670.

Why Does An Apartment Obtain More Depreciation Than A House?

You must be wondering how come an apartment fetches higher depreciation deductions in comparison with a house. When you speak with leading property depreciation consultants they will tell you differences in property depreciation between houses and units. It will be useful for property investor to find out how a unit gets more depreciation deduction than a house. When you look at depreciation deductions, various things may impact the final calculation. It will consist of property’s purchase price, construction beginning date, settlement date, land value and fitting & fixtures’ value inside property. As a result of infrastructure amount involved in construction of residential unit compared with a residential property, the entire claim can be significantly impacted.

Let us check the various factors below:

More fixtures and fittings:

Units tend to include a larger number of fixtures and fitting when compared with a house. It therefore lets the owner claim against several items inside the units. It may include lights, carpets, and dishwashers. Additionally, unit owners will also be allowed to claim for a part of common property. It has been defined by Australian Taxation office (ATO) as spaces inside a complex or development shared between owners. It will include things like pools, driveways, external furniture, fire stairways, and lifts. Shared property has been recognised as one of the most vital difference between houses and units for the purpose of depreciation. However, one may claim deduction for them in select states. You may use an investment property calculator to carry out your estimates of depreciation.

Maximise your deduction:

It is advisable to maximise your available deductions. You will only be able to do it by seeking the services of a professional Quantity Surveyor. An expert Quantity Surveyor has the adequate information, knowledge, and capacity to identify depreciation deduction in a precise manner. Property investors find it difficult to secure exact depreciation deduction estimates for an investment property. And, above all, the ATO will not identify property investors’ figures in a tax return. When you hire a Quantity Surveyor, he will ensure maximum available deductions for you.

Role of Quantity Surveyor:

A Quantity Surveyor will carry out a site inspection to identify the exact number of plant and equipment items. Only then he will be able to provide these deductions. He will also be taking pictures, measurements, and crucial notes to boost the depreciation schedule. A Quantity Surveyor is the right person to find out the exact investment property depreciation schedule ATO. A Quantity Surveyor will also decide the exact share of common property that the property investor is eligible to claim. It will be based on a few factors. These factors will include size of unit, position within the development and also the view.  A Quantity Surveyor can do so just by having a glance at the development’s building plans.

Conclusion:

Investment in an apartment will secure more depreciation than investing in a house. It is interesting to note that any fee of a Quantity Surveyor is 100 percent tax deductible. So always seek a Quantity Surveyor’s consultation to boost your depreciation claims. When an investor will be audited by the ATO, his depreciation claim will get supported by proof of documents. If you find it tricky to calculate depreciation for residential rental property, seek guidance of an expert Quantity Surveyor.

10 Tax Deductions You Didn’t Know You Could Claim From the ATO

Sometimes we may end up missing some of the vital tax deductions and enhance our tax liabilities as a consequence. One of the vital tax deductions is claiming depreciation on a rental property. Many individuals in Australia find it a highly profitable business to invest in rental property. It allows them to claim various deductions. Sometimes individuals may claim some deductions but they either tend to forget them or lack awareness about them. You must keep records to ensure you accomplish the best possible tax return.

We have prepared a list of top 10 tax deductions that you may claim from the ATO:

1. Sunscreen Protection:

Australian Taxation Office (ATO) accepts sun protection tax deductions for sunglasses when an employee gets exposed to UV rays. This expenditure has emerged common among outdoor workers that may include gardeners, electricians, or construction workers.

2. Shoes:

You will be eligible to claim for the expense of shoes that are an essential part of your office uniform. The uniform may be obligatory or non-obligatory depending on the organization you are working for. Work boots used by construction works are also tax-deductible. You may speak to Deppro Perth for more details on this kind of deduction.

3. Home office:

If you are a worker but working from home, you may claim a tax deduction for costs linked to those works. These are also known as home office running expenditures, phone and internet costs.

4. Handbags:

Handbags, being used for office work, will be eligible for a tax deduction. And, women will get several reasons to purchase a new handbag. ATO has recently confirmed that handbags can be claimed on tax provided they are used for office work.

5. Guard dogs:

ATO claims if you have an actual guard dog who offers security to your property, you may claim a deduction for it. As it is a little controversial, you may speak to Deppro QLD to eliminate your doubts.

6. Artworks:

When you purchase artwork for your office, you will be able to enjoy a tax deduction on this expenditure. Whether it is for the company’s cafeteria or meeting room, the write-off rules will be applicable to it.

7. Gym tools:

You may claim a tax deduction on equipment such as pool tables, ping-pong tables, etc. It is important that you have made their purchase to keep the workers healthy and fit.

8. Media subscriptions:

Products that are linked to your business such as publications or media subscriptions will be tax-deductible. It may also include magazines and journals.

9. Meals:

You will be allowed to claim tax deductions for overtime meals. It may include food and drink on overtime.

10. Bad debts:

If you repay your employer cash shortage or client bad debts, you will be entitled to claim a tax deduction for such amounts.

Conclusion:

According to Deppro tax depreciation, the above 10 expenses will be eligible to claim deductions that you have ignored for long. It will bring down your tax burden every year. Sometimes, many individuals lack the awareness of the type of expenses that may be claimed. When you operate your business from your house, you may claim a part of your home insurance. Car insurance will also be tax-deductible in case you use your personal car for work.

The Lowdown on Quantity Surveyors

You will come across several professionals and experts in the property domain. They will leave no stone unturned in boosting the financial outcomes from your property portfolio. You may face several challenges in your investment. The relevance of tax depreciation quantity surveyors continues to rise. You will come across solicitors, building inspectors, accountants, and mortgage brokers to guide you through these challenges. A large number of buyers are aware of key advisors. However, you must have never heard about one professional as he hardly gets the credit he deserves. We are talking about quantity surveyor. Quantity surveyors are endowed with some special powers. They help you receive the maximum advantage of your investment.

Given below are some important details about quantity surveyors:

Role of Quantity Surveyors

They are independent construction experts who calculate and estimate the cost of construction. They possess the required knowledge for carrying out these tasks with expertise. They help in preparing budgets and check viabilities for projects. Quantity Surveyors analyze tenders and quotes for constructions. Their expertise allows clients to function with assurance and help them negotiate from a position of knowledge.

Advantage of Tax

If you invest in a property but without seeking a depreciation report prepared by Quantity Surveyors, you may face some challenges. Depreciation implies how much several materials, fittings & fixtures in your investment decline in value over a period of time. Quantity surveyors calculate depreciation on rental property. The kitchen that you install during your renovation will deplete in value over a period of time. Tax lets you deduct that loss you incurred against your income within specific guidelines. It implies your tax bill every year comes down. And, for individuals on PAYE schemes, there will be an attractive bonus in terms of an increase in the tax return.

Advantages of Quantity Surveyors

Quantity Surveyors offer you several advantages that you can’t overlook. Quantity Surveyors have the required expertise to find out several types of improvements that you may claim depreciation against. They help in claiming depreciation on property. Quantity Surveyors will undertake a detailed inspection of the investment to recognize and classify every item for depreciation in their report. They also find out capital works or plant and equipment. There are different laws that are applicable to find out the level of depreciation that may be applied. The various laws also help in deciding the rate at which depreciation can be claimed. The rules can also be swayed by how much you may spend on a specific item. For instance, a fan worth $250 can be claimed in complete right away while an AC’s depreciation can be claimed for several years. You may get confused when you read rules around tax. And, this is the reason why it becomes imperative to hire the services of a Quantity Surveyor.

Conclusion:

A Quantity Surveyor will help in solving all your tax and depreciation woes. They will prepare your investment’s tax depreciation report. They will include everything in that report and you may directly hand it over to your accountant. You will gain the reward of his vast knowledge. It is worth noting that the report will hold relevance for 40 years.

How Does Your Investment Property Reduce Your Tax?

You may find that at times earning money seems to be a never-ending cycle of earning, saving, and investing. And, tax time may be causing more hassles in the road towards wealth. You may seek the assistance of leading professionals at Deppro Depreciation to liberate yourself from this tax trap. Investment properties have emerged significantly in reducing tax. And, they offer you a vast range of benefits as well. They also provide potential to earn you money. Property markets have emerged to be quite stable. However, you may witness certain variations in prices and demand.  The most important fact is that everyone needs a property to keep them protected.

Given below are things that will reduce your tax:

1. Interest:

You will be eligible to claim interest levied on loans as a tax deduction when the concerned accounts are used for investment purposes. This may include interest accumulated via a mortgage on an investment property. It may also include money borrowed for purchasing shares or other loans concerned with investment portfolios. For instance, if you have a $500,000 mortgage for an investment property, where interest is levied at 5 percent/annum and paid monthly for 30 years. After 12 months period, you may have to shell out $15,542 for this loan amount. And, there will also be $15,541 tax deduction to counterbalance the cost of investment property.

2. Rental expenditure:

It is interesting to note that any rent amount that you get will be considered as taxable income. When you have acquired rental properties, you may claim various types of expenses to counterbalance the tax amount you pay every year. These expenses that you may claim include water rates, land taxes, gardening, pest control, insurance, property repair, and maintenance, etc. You will also be allowed to make claims for any travel that you indulge in related to your property. These may include rent collections and inspections. You need to prepare your rental property depreciation schedule to claim these expenses.

3. Holding costs:

These costs may be related to the buying of the property before anything is constructed. For instance, when you purchase land with plans to construct, you may have to pay interest on land. You will also need to pay interest on various phases of construction. These costs are classified as holding costs or what you need to shell out to hold onto the property before getting a tenant. These costs have emerged as one of the significant tax-deductible expenses when it comes to investment property.

4. Depreciation:

Tax deductions follow similar rules for depreciation of building claims. It is linked particularly to fittings inside the investment property. It may include things such as fans, power points, lights, showers, sinks, etc. These things are subject to wear and tear over a period of time. An expert building surveyor will be able to calculate depreciation costs on fitting and buildings. He will prepare a thorough tax depreciation schedule for you.

Conclusion:

Your investment property will go a long way in reducing your tax. So, when you buy a property it will offer your great amount of depreciation. You should consider buying those properties that will have higher depreciation. A wise investor will have the idea that they can buy many properties that will be able to pay for themselves. You should purchase new properties as they will have larger depreciation in the initial years. An expert quantity surveyor will help you in claiming depreciation on investment property.