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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.

5 Things Your Tax Depreciation Schedule Must Include

Sometimes your investment property tax deduction calculator may not display everything that you may claim. A large number of people tend to miss out on the assets that are included in a depreciation schedule. You may seek the help of professionals who have detailed knowledge of ATO property depreciation. When it comes to property depreciation, many investors tend to miss this deduction. You must understand that it may help you save thousands of dollars annually. Sometimes, investors do make claims but they do so by using an incorrect schedule. An expert quantity surveyor will help you to create a robust depreciation schedule.

Given below are five things that your tax depreciation schedule must include:

1. Scrapped items:

When you undertake renovations on your property, you may be left with some items of no use. Several people end up throwing these unused items away without thinking twice it. It is interesting to note that unused and old items have a scrapping or residual value – you will be able to claim a final depreciation sum on any such items that you plan to chuck out. These items are generally left after carrying out renovation works, such as old appliances or carpets, etc.

2. Common indoor equipment:

Individuals claim depreciation on their units’ assets. However, they may lack information about the assets that they share with the rest of the units in the apartment. You will be eligible to claim a deduction for your portion of those as well. A large number of investors miss these deductions every year thus losing savings. Deppro quantity surveyors will help you with these matters and eliminate your doubts. These common items are fire extinguishers, AC units, lifts, etc. You will also be able to claim deductions for ventilation and hot water units.

3. Common outdoor items:

You can also claim depreciation for common outdoor items as well. This may include fences, landscaping equipment like pergolas, pathways, etc. You will also be eligible to claim on a shared swimming pool in your apartment. Please note: it may not include some common outdoor items like plants or turf.

4. Design professionals’ fees:

ATO tax depreciation schedule has mentioned that your depreciation schedule may include fees of design professionals in your tax deductions. You need to ensure that you have provided your Quantity Surveyor with exact receipts for such services. This will help in maximising your claim for the fees you had to pay out of your pocket.

5. Money paid to the council:

You need to pay fees to the council for several services. These costs may include lodging application fees or obtaining council permission. While constructing your own property, you need to invest money into infrastructure, which may include footpaths or gutters. When you prepare the vital depreciation report, make sure to include these items.

Conclusion:

You should check your depreciation report and ensure that it includes all the items mentioned above. If you miss any items, you will end up missing out on many ATO tax incentives meant for homeowners. Get effective property valuation and seek the help of experts to create a correct tax depreciation schedule. And, save thousands of Dollars that you have been missing until now every year due to lack of knowledge.

Depreciation on Renovations – What Are Substantial Renovations and Do I Qualify?

Owning a property has never been an easy task. People might look at the security and income it provides however, they fail to notice the hassle involved in maintaining a property. The most common problem with owning property is the need to upkeep and maintain it regularly. Also, owning a property means you need to pay various taxes, and ensure you are staying updated with the latest tax laws. This blog looks at the sweet spot where both these issues converge. We will look at some nuances of the latest laws regarding a Federal tax depreciation schedule.

Recent Legislative Changes

Let us first take a step back and see what has changed recently. Earlier, the date of purchase didn’t impact the eligibility of claiming depreciation. Any depreciation on pre-existing plant and equipment was eligible. In 2017, the law was amended to state that owners were not eligible to apply for ATO depreciation rates for installations made by the previous owner. The present owner, however, was allowed to claim depreciation on renovations carried out.

Which Renovations Qualify?

The changed laws would be applicable only if the renovated property was then leased out. Also, the depreciation can be claimed only if the depreciation claim is made within six months of the property being leased out. The owner would be able to claim depreciation for both plant and equipment as also for capital works. The details of such renovations would need to be enlisted in the rental property depreciation report. Finally, there is another important point to keep in mind; after substantial renovations have been carried out, the property is also considered by this law as a new residential premises. Therefore, depreciation can be claimed on both elements of the property – renovated structure and new premises.

Let us see what kind of renovations would qualify for such depreciations. External walls, as well as interior supporting walls, are included. Similarly, renovations to the floor or the roof of the property also fall within the ambit of the modified law. Even if you are modifying staircases inside the house, you can claim depreciation for them. Some owners go deeper and even replace or remove the foundations of the structure. Even such renovations are eligible for claiming depreciation. On the other hand, it is important to remember that only ‘substantial’ changes would qualify. So if you have installed a new piece of equipment in your kitchen, it is likely not to be considered as a renovation. These fine points of the law might not always be easy for you to understand. This is why it is always recommended to use the services of a quantity surveyor. Such a professional can create a depreciation report in accordance with legal requirements.

Conclusion:

We still recommend that you utilise the services of a reputed consultant like Deppro, qualified and experienced quantity surveyors ensure that you do not miss out on any tax breaks that you are eligible for.

Top 4 Tips for Maximising Depreciation Deductions in Your Hotel

When one mentions the word hotel, what springs to mind? Cozy rooms, tasty food, well-stocked wine cellars and men and women trying to make their guests comfortable. But behind the scenes, hotels have a lot of wastage (electricity, water and food). This wastage reduces their revenue and income. While hotels might look glamorous on the outside, they too need to save every dollar behind the scenes. One of the less known but very effective ways for hotels to save their hard-earned money is by filing the correct Australian tax return. This blog will tell you four easy ways to legally reduce your tax outlay for your hotel.

Hotel Depreciation Schedule

In case you are in the process of buying a hotel now, then the complete inventory of its assets would already have been made earlier. But you need not lose out on the available tax deduction on account of depreciating inventory/assets. You can still employ the services of a certified quantity surveyor and create a federal tax depreciation schedule. The assessment of different assets of a hotel is more complex than that for a residential property. The assets which qualify as ‘plant and equipment’ in a hotel have a separate listing in the ATO Depreciation rates. That is why a competent quantity surveyor can ensure that any claim you are eligible for doesn’t get missed out on. The quantity surveyor would also ensure that you do not pay tax for the same asset twice.

Make your renovations count

A hotel always needs to look its best at all times. That is the reason hotels undergo renovations or refurbishments quite frequently. As a hotel owner, you need to make sure that your depreciation schedule stays updated always. To ensure this, keep your quantity surveyor informed whenever you are planning an activity. They would advise you what to do with the assets you are replacing, and how to list it in your property report. Many hotel owners make the mistake of sending discarded items/assets to scrap. While the renovation is in full swing, keep your discarded assets aside, and also list out all the new fixtures and fittings being installed. At the end of the refurbishments, the quantity surveyor will make an overall assessment and update your depreciation schedule.

Try to stay within the industry

Like we mentioned before, hotels in particular and the hospitality industry in general, are quite different from others. While looking for a quantity surveyor, try to engage one who has extensive experience with hotels. That way, you will not need to explain your peculiarities to him, and he can easily understand your industry lingo.

Different treatments while buying new

We spoke earlier about situations where you are purchasing an existing property. If you do have a new hotel purchase, then you need to consult your quantity surveyor about how best to treat your assets. This will help you maximise your tax deductions and save money.

Conclusion:

If you are buying a hotel or own one, please make sure you get the best possible benefits of tax deductions on account of the depreciation of your property.

Why You Should Consult a Quantity Surveyor

Many people are not aware that they can get a deduction from their taxable income through a property depreciation schedule. You can secure deductions from construction cost and plant and equipment allowance. Construction cost includes the costs pertaining to the property. Property and equipment allowance includes the removable assets discovered within the property. And, both construction cost and property and equipment allowance are subject to depreciation. They are also covered by the tax depreciation schedule for investment properties in Australia. You can find many leading tax depreciation surveyors in Australia, in particular at Deppro QLD.

Below are some of the reasons why you need to consult with a quantity surveyor in order to reap maximum benefits:

1) The Expertise of Quantity Surveyors:

Quantity surveyors have expertise in preparing an investment property depreciation schedule period. It is applicable for the property built after September 1987. Neither your real estate agent nor your accountant can assist you with this. However, you may ask for their advice. Quantity surveyors have the required information and experience to calculate the accurate value of your property and tally it with tax regulations.

2) Professional Guidance:

Another valuable service that quantity surveyors offer is that they will guide you with all the details of claiming depreciation from the tax office. They will help you find out that can you claim depreciation on a rental property and how much? Many end up missing the important chance as they filed for the property depreciation claim after the last date. The availability of a qualified quantity surveyor will ensure that you do not face such issues while filing a property depreciation claim.

3) Maximum Benefits of Tax Depreciation:

They will let you know how much of a deduction you will receive against your taxable income through the property depreciation schedule. The trustworthy and expert quantity surveyor will include all the deductible objects to gain maximum benefit as tax time arrives. The surveyors have expertise in finding out allowable depreciation on rental property.

4) Accurate Cash Projection:

Quantity surveyors help you avoid certain risks and hazards related to some calculations which provide rough estimates. They make correct cash projections which will allow you to plan your budget effectively and ahead of time. With accurate cash projections, you will not have to face any unpleasant surprises. You can stay away from the redundant financial obstacles such as overpaying for construction materials.

5) Reduce Expenses:

Quantity surveyors can easily handle all costs linked to civil engineering and building projects. They overlook both the site work and office work and their main objective is to reduce expenses and keep them under the budget. They achieve their objectives without making any compromise on the quality of the product and they adhere to all the safety regulations.

Conclusion:

Expert quantity surveyors take an active part in projects and work with clients or contractors from the very beginning to prepare detailed estimates of the project. Many times, they collect tender and contract documentation, carry out the required feasibility studies, and risk control processes. As soon as the building project begins, they track everything that may cause cost variations. Quantity surveyors are experts in exploring opportunities that will save money. So hire the best quantity surveyor tax depreciation today and maximize your benefits.

How to Claim Depreciation on Previous Owners’ Renovations

Many investors know that they are eligible to claim depreciation of building works they have carried out to a property. However, some don’t know that they can also claim depreciation of renovations done by former owners of the property. The claimable depreciation will depend on the property purchase date and extent of renovation took place. To claim depreciation, you need to consider a few factors like ATO depreciation rates, 2017 budget, etc. The 2017 budget is important as your claims depend on whether you purchased the property before or after the budget.

What if You Have Purchased a Property Before 2017 Budget?

Things won’t be complicated if you happened to purchase the property before the 2017 crucial budget. In such a scenario, you are eligible to make claims under Division 43 and Division 40 of the Income Tax Assessment Act. Division 43 covers the capital works undertaken by the former owner to the concerned property. It may also include all the renovation works such as a bathroom, kitchen restoration, building extensions, etc. It will also include any work carried out for building structure improvement. In other words, you can claim renovation work on the roof or walls done by the previous owner. You can also consult property depreciation consultants to make the process easier.

What if You Have Purchased a Property After 2017 Budget?

In this scenario, you are likely to face some complications. You will have to check the amount of renovation that took place or whether the previous owner did any renovation. Budget 2017 introduced the term “new residential premises”. You will get more details of the new residential premises in Goods and Services Tax or GST Act.

Importance of GST

You will come across the term “new residential premises” under section 40 to 75 of the GST Act. It means that the premises which have not been sold or rented out as a residential property prior to your purchase won’t cause any problems as the term covers new properties.

The Act further elaborates such premises as those that underwent “substantial renovation”. Such renovations mean removal or replacement of the entire building. And, installation of a new bathroom or kitchen won’t get inclusion under the substantial renovation.

How It Will Impact You?

If your investment property does not come into the category of substantial renovations, you can’t claim Division 40 depreciation. A new tool on its own is not sufficient to form a substantial renovation.

If the building underwent sufficient renovation to fall in the category of “new residential premises”, you can claim for Division 43 and Divison 40 work. In such a situation, a quantity surveyor will check the amount of renovation work done on the building. They will create a timeline of the building and create a house depreciation report. The report will cover the renovation work, cost, and extent of the renovation. You can use the report to check if your building comes in the category of “new residential premises” or not.

Conclusion:

It’s important for you to find out the exact date of your property construction. This will help you find out what earlier renovations you can claim depreciation. You can also seek the help of a quantity surveyor to develop a detailed report of property depreciation tax deduction

How Much Will Your Depreciation Schedule Cost?

Every asset you own goes down in value over a period of time. In real terms, this is because of wear and tear due to regular usage. In accounting and financial terms, this reduction in value every year is expressed as a percentage. The concept is broadly similar across the world. But the rules, implementation, and even percentages might vary a bit according to the country and asset category. For this post, let us consider the impact of depreciation on an investment property in Australia. Let us also consider what could be the likely costs involved in calculating Australian tax depreciation on the property.

Tax Implications of Property Depreciation in Australia

The ATO (Australian Taxation Office) has laid down very clear rules regarding depreciation of the value of an investment property. The annual reduction in the value of fixed as well as removable assets of a property would need to be listed in a depreciation schedule. According to this schedule, a property owner can claim deductions on the tax payable by him or her. That is why it is very important to get the schedule prepared by a qualified and experienced professional. Most good consulting companies have experienced quantity surveyors on their rolls. They take accurate measurements and make the schedule exactly as per the recommendations of the ATO. This ensures that a property owned is not taxed more or less than he should be.

Cost Implications of Preparing a Depreciation Schedule

Like everything else in life, there are several ways of going about this. One can even choose to make the schedule on one’s own. This way the depreciation for property would be calculated at zero cost. But this would run the risk of a major error. The error could turn out to be costly in the future. The second option is to employ a company which promises to charge less. You could get the job done cheaply, but there would be a catch. There would be several important aspects not covered under the charges. These would either reduce your tax savings later or cost you more in additional charges. Either way, you end up paying more than you save. So what is the best option?

How Much Will a Good Depreciation Schedule Cost?

The best way of deciding or understanding this is to first list down everything which you necessarily need. For example, do you need an exclusive report for your property? Or would you be okay with pooling the cost with other owners of the contiguous property? Should your report contain inputs from other relevant parties? Would the formal inspection report be part of your tax submission? Based on these points, it could cost as low as $175 plus GST. And it might go up to $1000 plus GST for a comprehensive report.

Conclusion:

A good Deppro depreciation report might cost you more than other cheaper alternatives, but it will help you save more in the long run. You will not only pay less tax, but you will also be protected from needless taxation that is deductible legally.

7 Questions You Should Ask Your Quantity Surveyor

Before that time of year rolls around again, when you have to file your tax return, you need to begin preparing your documents. While the income and expenditure are fairly straightforward, most people get stuck while preparing their tax depreciation schedules. That is why most people lean on professional tax consultants for this. If you own an investment property or a rental property, you may also require the help of tax depreciation surveyors who can make an assessment of your property and then prepare the submission schedule. Before you hire the services of such a surveyor, there are some important things which you should ask your quantity surveyor.

1. Do You Have Certified People Or Will You Outsource?

The survey work for property depreciation schedules can’t be done by just anyone; only certified and qualified surveyors can do it. But many tax consulting firms outsource the work of surveying to smaller firms. In such cases, you run the risk of having the survey done by someone who isn’t certified. Therefore, it is vital that you check with the firm as to whether they outsource any of their work.

2. Do You Have Insurance Coverage?

Surveying involves a whole lot of measuring at your property, for which surveyors need to often climb ladders or onto roofs. If they suffer a fall or any other kind of mishap, it would pose a major issue. That is why it is advised that you only hire firms who have insurance coverage.

3. What Are The Services You Provide?

The quantity surveyor tax depreciation only do the survey and measurements. After that their would need to prepare your returns as well. That is why you need to find out whether the firm you are employing only does surveys or can they provide end to end services.

4. Do You Have Any Questions For Me?

Every property has its own special features and would be differently treated by tax laws. Before the surveyor begins his or her work, you need to show them around and ask questions about your property. The answers to those questions and the surveyor’s own questions to you would tell you how well the survey would be done.

5. What Elements Would Be Included In The Depreciation Report?

Like we previously mentioned, a quantity survey is the start of your tax declaration and claims process. The Deppro quantity surveyors would finish their job and hand it over to their colleagues who would complete the rest of the process. You need to know from the surveyor what elements he or she will include in the report because that would determine the tax deduction amount.

6. What Categories of Properties Do You Handle?

It is important to learn what kind of properties their firm specialises in. There are firms which would be doing the surveys for commercial or industrial properties only. So, they might not have the required expertise regarding residential properties. It is preferable to work with someone who knows their stuff.

7. What Is Your Fee Structure?

Last but not the least; you need to know how the surveyor would charge their fees. There are some who charge a flat fee, while there are others who charge as per the square feet area of the property. There could be some others who charge a percentage of the total amount in the depreciation schedule.

Conclusion:

Asking the above questions will not only help you know how professional your quantity surveyor is, but it will also help you learn some extra information about your own property.   If you think there should be some more questions which are important to ask your quantity surveyor, please let us know so that we can share those with our readers and customers in our next post.

Depreciation Schedules – By Independent Property Inspectors

Depreciation refers to the decline in value of a commodity or an asset. In terms of tax depreciation schedules, the term corresponds to a tax deduction or compensation for wear and tear caused to a piece of property. Rented houses, that constitute the property of taxpayers, have a tendency of suffering damages in the course of time and thus the term depreciation comes into action.

Depending on the value of a property, the property depreciation schedule of a piece of property can amount to a significant amount of money for a property owner. Whether a property is new or old, the compensation for its renovation does amount to a certain value. Keeping this in mind, a property owner must try their best to do everything to lay a claim on the tax deduction of mending or renovation.

How Does a Tax Depreciation Schedule Benefit a Property Owner?

A tax depreciation schedule is prepared by a quantity surveyor and it consists of all the components that are eligible for depreciation. The amount of money you invest for the improvement of property comes under tax exemption. That is to say, you will not be taxed for the amount of money that you invest in enhancing its value.

An important thing to bear in mind is that it is easier said than done to meet the requirements of ATO. Hiring a qualified quantifier surveyor is a good idea to make the most of an investment property depreciation schedule ATO. Though you can consider approaching an accountant, a quantity surveyor would be able to provide you with an accurate calculation.

What Amount of Depreciation Can You Expect From Your Property?

ATO tax depreciation schedule is more complicated than what it looks like on the surface. One needs to get to the bottom of the facts in order to gain a proper understanding of the value of tax depreciation for a piece of property.

An important thing to remember is that the value of depreciation depends on the age of a property. Thus, it can vary from one property to the other. Further, your property will be eligible for recovery of compensation only if you have built it after 1985.

Tax depreciation in connection with a property does not cover the land on which it stands. Even if your property was built before 1985, you can receive depreciation on all Plant and Articles.

Final Thoughts:

It is important to conduct the depreciation of a property due to a variety of reasons. Firstly, it necessitates a property owner to carry out a thorough inspection of their property. This can help an owner identify all the existing problems in their asset.

Further, it also encourages an owner to promote the value of a property with the assurance that the costs for improvement will not come under the slab of taxation. A piece of property which undergoes maintenance and improvement from time to time remains in proper shape for long-term use.