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

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It doesn’t matter when you bought an investment property. You may have thought about buying the property a few weeks back before the financial year ends. But, in this case, it’s worth opting for tax depreciation schedules. While such schedules last for a longer period of time, these include the prime cost method apart from the diminishing value method. The report will give you the details of how much the investor can claim the tax depreciation. So, let’s take a look at how you claim the deductions in the financial year.

About cost write-offs

Now, let’s say, you own a property for only three months or days as on June 30. In this case, you can claim for an immediate write-off, pro-rate of building, and low-cost assets. But, if the building is 25 years old, then you can only claim a deduction of up to 2.5% ever year. While the deduction is on the original cost of the property, you can claim it up to 40 years. In case you don’t know the building cost, then you can approach a quantity surveyor. Apart from helping you with the cost, he would also able to assist you with the depreciation schedule.

But, regardless of what it might be, investors can foresee the best capital growth prospects in the years ahead. According to the property report, Melbourne, Brisbane, and Sydney are some of the locations where there’s a potential for growth.

About immediate write-off assets

Under immediate write-off assets, you can claim only for things that cost not more than $300. These include door closers, exhaust fans, smoke alarms, and other things you may not use often at the property. Additionally, if the price of the brand-new asset lies between $300 and $1000, then you can expect a depreciation of 18.75% for the first year. This deduction is done based on the original value of the asset. Under the category, you can expect the depreciation on ceiling fans, range hoods, garage door motors, and any other things.

 

When it’s time to change the infrastructure, this is the best time to buy any new items for the property. Moreover, after you install the item, you can claim the depreciation in the year’s Australian tax return. However, many individuals and accountants are unaware of how to claim the deduction. Hence, when you purchase the investment property, you should check for the depreciation deductions for the financial year.

Conclusion:

If the property is undergoing construction work, then think about buying it before June 30. If you buy the property beyond the date, then you may have to wait for a year to claim the deductions. Way ahead, once you purchase the property before the specified date, then you would able to recover some cost through savings. The savings refers to the amount you will make from depreciation. But, if you are planning to purchase a property, then you can seek a quote. This would give you a fair idea about whether you would improve the tax returns. For any queries, you could contact a team dealing in Capital Claims Tax Depreciation. You could also contact experts to get the details of depreciation residential rental property.

A Depreciation Checklist for Commercial Property Owners and Tenants

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You may find it difficult to comprehend the various tax depreciation allowances available for owners and tenants of commercial property. With increased awareness about Australian tax depreciation, property owners and tenants may make more informed financial decisions and enhance their cash flow. A property owner is eligible to claim depreciation for Division 43 capital works that they have paid for. This may include building, structural additions, and recently constructed or renovated kitchens, outdoor areas, and improved bathrooms. Additionally, Division 40 assets are also claimable that they have paid for and included as part of the tenancy agreement. Tenants may also claim depreciation for building fit-out in case they paid for it as along with machinery, furniture, etc.

Here is the checklist:

1. Capital works deductions:

These deductions are applicable to structural elements of a building. Capital works deductions will apply on bricks, mortar, walls, tiling, flooring, wiring, concrete, mezzanines, etc. These deductions are based on the past expenditures of the building. And, apart from the tourists’ accommodation, they can be claimed on commercial buildings in which construction started after July 2, 1982. Capital works deductions for tourists’ accommodation are eligible to be claimed on building in which construction began after August 21, 1979. Consider these factors when you calculate depreciation for property.

2. Plant and equipment depreciation:

Plant and equipment assets can be defined as those assets that are removable within an income-generating property. It may include hot water systems, ceiling fans, carpets, air conditioners, exhaust fans, light shades, and blinds, among others. Depreciation for plant and equipment assets will be calculated on the basis of the individual effective life of every object as specified by ATO. The actual life of assets tends to differ from one industry to another industry. Therefore, it becomes significant to refer to an expert Quantity Surveyor, as they will ensure that deductions are calculated appropriately.

3. Tax depreciation schedule:

A tax depreciation schedule can be described as a report that includes all deductions in the income-generating property. The report is prepared with the assistance of an expert Quantity Surveyor. It can assist to enhance property owners’ and commercial tenants’ flow of cash. The quantity surveyor will require a few details while preparing a schedule. Amid the vast commercial property types, an expert site inspector will have to carry out detailed scrutiny. In this they will assess the building and floor coverings, specify construction methods, the material used, condition of te property, and workmanship, among other things. The Quantity Surveyor will then use these details to enhance depreciation deductions.

Conclusion:

Tax Depreciation Schedule will remain in existence for forty years. The quantity surveyor will also extend his help to property investors in claiming depreciation on investment property. If you are keen to boost the capital works and depreciation deductions, you must always hire a professional quantity surveyor as they will help in processing known and unknown costs alike. Not to mention, they can also asses the contract of sale and tenancy contracts to make sure that building works and assets are correctly allocated between entities.

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.

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

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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

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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?

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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

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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

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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

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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?

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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.