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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.

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.

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

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

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

1. Depreciation deduction:

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

2. Claim cost of schedule:

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

3. Partial year claims:

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

Conclusion:

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

4 Commercial Property Depreciation Facts You Must Know

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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

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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 schedule. If you have more such questions hitting your mind, do let us know!

A Quick Guide to Depreciation Claims on Granny Flats and Tax Depreciation

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Granny flats are a kind of secondary residence on your property premises that you can rent out based on your convenience and preference. They can be thought of as an extension having almost all the features of an apartment or flat. The only difference is that such a unit is not bought by you in a separate apartment but exists there itself in your own property vicinities. The positive side of having such a flat ready for rent purpose is that you can have your eyes on it at all times and can also enjoy the benefits of Tax depreciation. Usually, people chose to build such granny flats towards the backside of their house so that your privacy and convenience is not restricted even if you plan to use it as a property rental.

What should a granny flat contain?

A granny flat should have the basic requirements of a small apartment such as a one-bedroom, drawing room, kitchen, and bathroom. Granny flats are usually rented out to the elderly people though that is not the only purpose in which you can use your property.

Granny flat tax exemptions

If you have purchased or built a granny flat, then you can look forward to some considerable tax deductions. The deductions may depend on leasing the flat or using it for your own residence, but yes the benefits are worth having one. You may be required to pay CGT taxes if you use a granny flat for generating some income by renting it, but the same stands as void when the apartment is occupied by a relative and rent-free. In either way, owning a granny flat can help you in some considerable ways for claiming depreciation for residential rental property. It enhances capital improvement by hiking the value of your investment and also soars the income-producing capability.

How to claim deductions on a granny flat?

While buying a granny flat, make sure that you ask the seller about the claims that you can make on the granny flats. Just because that property is on your own land doesn’t make things different while claiming tax exemptions and deductions.

The granny flats are more like a secondary dwelling space and thus at first should be able to generate income for being eligible for claiming investment property depreciation schedule ATO. Being in possession of a granny flat and being able to scoop some profits out of it makes you qualify for depreciation for capital work which is inclusive of all sorts of wear and tear that occurs on the property. One can also claim for plant and equipment depreciation while owning a granny flat.

Here are a few things on which you can request a tax dispensation:

  • Alarm systems
  • Ceiling fans
  • Air conditioners
  • Hot water system
  • Electrical fittings
  • Pumps
  • Curtain blinds
  • Pool patio
  • Bathroom fittings, etc.

Wrapping up:

Buying or constructing granny flats on your own property can bring in a whole bundle of chances to apply for tax depreciation. Thus it can be taken as one of the best high yielding and beneficial ideas to invest in a granny flat. Also, you can call in for the quantity surveyors to help you out with the depreciation schedule planning to make the most out of it.

Why Does An Apartment Obtain More Depreciation Than A House?

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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.

Tax Deductions That Property Investors Can Claim

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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.

4 Tax Deductions Everyone Should Know While Investing in Property

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Many people lack awareness about one of the most profitable tax deductions investors use to make a purchase economical. Interest has emerged as one of the major expenses of buying an investment property. And, a large number of people are not aware that mortgage interest payments on an investment property is tax-deductible. For the benefit of investors, interest has emerged as a cost that is deductible from rental income; it can help in minimising your tax obligations. If you are planning to invest, it is ideal to gain some knowledge of property investment. You should seek the services of experts for claiming depreciation on investment property.

Below are some of the main tax deductions that you should be aware of:

1. Maintenance and repair cost:

In order to maintain your investment property, you may have to indulge in some maintenance and repair costs. There are various types of repairs and maintenance such as repairing a leaking roof or fixing a damaged tap; these costs are all tax-deductible. Your property agent’s charges and insurance will also be deductible. You can claim the costs of running your home office like electricity, internet or rent to the level you use it for investment. Your advisor’s fees, accountancy fees, and property investing subscriptions also fall in the category of tax-deductible items.

2. Loan interest:

It is noteworthy that annual interest paid on investment loans will be tax-deductible. You should asses your property investment returns with the utmost care. An experienced investor knows that interest on borrowed money for investment property is deductible. It does not matter whether the money is for stamp duty or legal fees. You only have to prove that the funds are related to the investment purchase. And, it holds true whether you borrowed the funds from a bank or from different property’s equity.

3. Depreciations:

Many people frequently ignore depreciation deductions in old properties. They are under the notion that old properties lack depreciation value. However, this is not true. If you make any renovations or improvements to an older property since its construction, it can also depreciate. As your accountant won’t be able to prepare a property tax depreciation schedule, you can hire a quantity surveyor.  You should use the services of an expert quantity surveyor as he can spot all depreciation available on the property.

4. Travel:

At times some traveling undertaken for the purchase, maintenance or inspection of your investment will be eligible for a claim. You can claim by cents per kilometre for traveling undertaken to these experts or even to your own property. If you failed to claim them in the past, you will be allowed to put an earlier date. In case some confusion prevails, you can speak to an expert tax accountant.

Conclusion:

It will turn out to be profitable for you to improve your awareness of common tax deductions. Several studies claim that younger people tend to remain unaware of the various tax deductions. Few people are aware that interest repayments are eligible for tax deductions. Some experts say that the higher prices of houses may have caused people to get less occupied in research investing. However, you should not forget to claim your tax depreciation and in case you find the calculations tricky, you may seek experts’ services.