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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. 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.

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

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

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

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

2. Quantity Surveyors Hold the Required Industry Qualifications

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

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

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

Bottom Line

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

Claiming the Maximum Deductions Out of Your Rental Property

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Are you paying lots of taxes? Worry no more. You must start checking your options – can you claim depreciation on a rental property. Investing in property has already emerged as a top choice for many individuals. Additionally, there are several expenditures that you may claim in the form of tax deductions from a rental property. There are scenarios when allowable deductions may surpass rental income and put you in a loss position. It is also known as negative gearing.

Given below are some costs that will help you enhance your deduction on your rental property:

1. Borrowing costs:

This expenditure is linked to the fee produced when borrowing money for the purchase of a property. It is worth noting that these expenditures are eligible for deductions over a period of loan or more than 5 years period. For this, the total borrowing expenditure must be over $100. You will be able to claim several borrowing expenditures which may include Loan establishment fees, mortgage broker fees, stamp duty levied on the mortgage, lender’s mortgage insurance among others.

2. Gardening fees:

These costs are also eligible for deduction. This will include dump fees, tree cutting charges, replacement costs incurred in garden tools, sprays, fertilisers, mower expenses, etc. You may speak to leading professionals as well if you face difficulties in calculating your tax depreciation cost.

3. Land Tax:

Land tax is the tax levied on the value of the land which is also tax-deductible. The bill of assessment of the land tax payable will be provided soon after the land tax registration form is submitted.

4. Repair and maintenance cost:

The cost that you incur when doing repairs and maintenance is also deductible. However, the cost can be claimed at a specific rate every year. Repairs are referred to as the cost that you bear when there is damage or deterioration to the property. For instance, when you replace a part of a window damaged during a tornado or hurricane, it may also include repairing electrical appliances, plumbing, painting the rental property, and repairing due to falling of tree branches, etc.

5. Telephone expenditures:

You can also obtain deductions on expenses incurred due to telephone calls. The telephone calls that you make while maintaining the investment property are always tax-deductible. You should calculate precisely all the allowable depreciation on rental property to maximise your deduction.

6. Water expenditures:

It is interesting to note that water rates are also tax-deductible. However, it will happen only in those scenarios when you pay the water bills and not your tenant.

7. Stationary and postage expenses:

This may include the expenses linked to the purchase of pens, paper, or various other office stationery items. It will also comprise the postage used for a rental property to communicate with agents or tenants. These expenses will be deductible.

Conclusion:

Building tax depreciation may also include various expenses for which you may claim a deduction. You may also seek deductions on agent fees and landlord insurance to cover the property from being damaged.

A Quick Guide to Clear All Your Queries about Capital Gains and Property Depreciation

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There are many questions that come to mind associated with tax depreciation report. You may often hear people asking how to claim their reductions? How to make the most of it? There are many such interrelated queries that investors have in their minds. So here in this article, we will take you down through a few questions that will clear all your doubts.

What is exactly property depreciation? Is it beneficial?

Property depreciation can be thought of as the depreciation of value on a building or property owing to the wear and tear that naturally occurs over the years. But property depreciation is not bad at all times; in some cases, it can reap benefits for you. When you have to pay taxes, property depreciation can be a boon that allows you to claim for property investment returns which means fewer taxes to be paid at the end of the year.

Capital works and its association with CGT

Capital works can be claimed on the building structure, which includes walls, roofs, bricks, electrical cables, tiles, etc. Claiming for capital work deductions can help in lowering the value of the base of your possession, which is further added to the capital gain. Thus you can expect a rise in the CGT amount, which becomes applicable during the sale process.

CGT and equipment depreciation

Many might not be aware of this, but you can even claim depreciation deductions on removable plants and mechanical equipment. Yes, you have heard it right, when you plan to sell your property, the profit or loss percent is computed separately on such items. You can seek assistance from tax depreciation quantity surveyors at Deppro to become more acquainted with the details. If the depreciation asset’s termination worth is higher than the cost then, you get to have a capital gain. On the other hand, the reverse case applies to incur a capital loss wherein the cost is higher than the termination price.

Can investors file for a discount?

A business owner who has invested in a property for more than a year stands eligible for a 50% CGT exemption. But, it is mandatory that they hold the property for more than a calendar year from the date of signing the contract.

Does property depreciation claim add to capital gains?

Yes, one can claim for equipment deduction and capital works at marginal taxable rates. Being in possession of a property for a period greater than 12 months makes you eligible for claiming a 50% deduction while selling your property. This implies that only half your property value is carried further for CGT, enabling you to file for capital work deduction claim. This will bring in some additional cash flow to your account, allowing you to be confronted with better opportunities for investments and to reduce the burden of your loans.

Types of CGT exemptions for people who reside in the property

If you are someone who dwells in the property, then you are excused from CGT as long as you use that property for your residence. Also, the land should not be more than two hectares. On the other hand, if the owners rent out the property to someone else and consider moving out, then the CGT exemption can be filed for about six years. But there stands a condition that such people should not purchase or own any other residential place.

Conclusion:

So these were a few things that you need to know as an investor to claim for property tax deductions. If you have more such questions haunting your mind, do let us know! We are here to help!

Renting or Buying: Which is the best choice for a commercial property?

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Deciding whether to purchase or rent a commercial property may be tough at an instance. When you plan to buy a property, you have to pay for it upfront. In case you have taken a loan, you only own the property once you have cleared the loan. But, when you rent a property, you would be considered as a tenant rather than the owner. So, before contacting an agency to know about tax depreciation investment property, here are some important things you must know:

What happens when you rent a commercial property?

When you consider availing a property on rent, you have to bear the costs as per the terms of the lease. While the landlord pays the capital cost, you can think about investing money in your business and focus on growth. If you wish to invest in the property, then you need to go through the rental property depreciation report. This would give a fair idea of how the tax would be deducted for the year.

How can renting a property be beneficial for you?

Once you avail a commercial property on rent, you can think about shifting to another location only when the lease ends. If you observe fluctuations in the market conditions or a change in personal life, then you wouldn’t have to bother much for a longer-term. Establishing a business at a property on rent can really help when the business is going to evolve in the forthcoming years. Renting also implies that you have to give less upfront cost. The concerned person has to pay a deposit equivalent to anything between 25% and 50% of the actual purchase price. If tax depreciation reports are what you’re concerned about then, you could contact Deppro.

What happens when you buy a commercial property?

When you make up your mind for buying a commercial property, you initially have to bear the upfront cost and the ongoing costs ahead. As you manage your business, you do have the right to make structural changes to suit your requirements. You may also think about selling or giving the property on rent a few years later. You can do anything without approaching an agent or a landlord.

How can purchasing a property be beneficial for you?

Purchasing a property means you can develop your business at a specific location for the long term. You also don’t have to worry about shifting assets from one location to the other. But, before finalizing the decision, it’s better to go through the tax depreciation investment property rules. While you start paying the upfront fees, you won’t have to pay for the rent that may increase year after year. You can actually focus on bearing other expenses while the payment is made at a fixed rate. Later, you could also make up for capital gain when you decide to sell the property after some years.

Conclusion:

Finally, no matter what your decision might be, you can always gain some significant tax benefits when the officers consider tax depreciation. If you are the owner of the property, you can claim depreciation under division 43 and division 40. While division 43 refers to capital work deductions, division 40 refers to deductions for assets and plant equipment. When you submit the tax returns, you can claim the depreciation on investment property ATO as the deducted tax.

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.

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.

Is Depreciation on Rental Properties Tax Deductible?

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When you rent your property to a tenant, it is important to include that specific rent as income on your taxes. Rental property tax deductions may cause several confusions. Many of the times, rental property is costly to maintain, especially when there are gaps between tenants. You may remove or subtract your rental expenditures. If your interest payments and expenditures on rental properties are higher than income generated, you may claim that loss. Several expenses are deductible in the year you may spend money. However, when it comes to depreciation, it is a different scenario altogether. A rental property tax deduction may emerge as a good method to increase your tax refund.

Given below are important factors that you must consider:

Depreciation

It is important to understand the definition of depreciation. When it comes to rental property, depreciation can be defined as assigning the property cost and not value assessment. You need to depreciate rental property even if it stays in a good shape. You may seek the help of experts for calculating property depreciation tax deduction.

What is Depreciable Property?

In order to seek a deduction for depreciation on a rental property, the property must full certain conditions:

  • You should own the property instead of renting or borrowing it from someone else.
  • It is important for you to use the property so that it generates income by way of renting it.
  • You should be able to define the useful life for the property.
  • It implies the property should be the one that would ultimately depreciate or depleted. It will help you asses your estimate tax returns. It is interesting to note that a home has a determinable useful life but a piece of land does not.
  • The useful life of a property is longer than a year. In case property gets depleted or depreciated in a year, you may have to subtract the whole cost as a regular rental expenditure.

Depreciating Improvements

Money spent on the improvement of a property will also be depreciated. An improvement helps in boosting the value of a property. It also helps in restoring the property to its mint new condition. Some of the common improvements may include building garages, replacing roofs, adding wall to wall carpeting, installing AC or heating system. However, some routine repairs and maintenance costs will be included under the category of improvements. Meanwhile, maintenance expenses will be subtracted as expenditures in the year you spend the money. And, replacement of the whole roof will be eligible for depreciation.

Conclusion:

You can begin taking depreciation deductions when you start using the property for generating rental income. We cannot rule out the significance of property investment returns. IRS has explained it as and when you put your property in service. And, depreciation will continue until one of the two scenarios takes place. The first one is when you have subtracted your whole cost basis in the property. In many cases, your cost basis will be what it may cost you to purchase the property. It may also include some fees and taxes paid at settlement along with any improvement undertaken to the property. And, the second one is when you eliminate the property from service. It implies you cease to use the property for generating income. It may be because you decide to sell the property or just stopped renting it.

All You Need to Know About Taxes on Rental Income

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When you have secured ownership of an investment property, you collect rent from your tenants. It is worth noting that you must declare that portion of rental income on your taxes. You have the scope of deducting all the expenses that you incurred while maintaining your rental property. You must carefully check the Australian tax depreciation rules. Some of the common expenses that you may claim include maintenance costs, depreciation, and borrowing expenses. You will not be able to claim deductions for those things that your tenant/s paid for. Tenants pay for utility bills or improvement bills among other things.

If you have become a landlord recently and you are facing some complications, here is how you may avoid common tax mistakes:

You need to make sure that your property is available for rent:

You need to make sure that your property is actually available for rent to claim a tax deduction. Along with this, you must showcase a clear will to rent your investment property. You may advertise the property so that someone can rent for it. You should read in detail about investment property depreciation rules to remove all doubts. It will be ideal on your part to avoid unrealistic rental conditions.

Get initial repairs and capital improvements correct:

You will be able to claim for ongoing repairs that are linked to wear or tear or some other damages. The damages must occur due to renting out the property and you will be able to claim them in full. You can claim them in the similar year you faced those expenses. If you get the hot water system or a part of a broken roof repaired, these can be deducted right away. Initial repairs for damages that took place when the property was bought like replacing damaged light fitting can’t be deducted immediately.

Claiming borrowing costs:

If your borrowing costs happen to be more than $100, the deduction will get spread over five years. And, if borrowing costs are below $100 or just $100, you may claim the entire figure in the similar year you faced those expenses. Leading professionals fees, costs incurred in preparing will help you understand how depreciation for property needs to be calculated. Borrowing costs may include loan establishment fees, costs incurred in preparing and filling mortgage documents, and title search charges.

Claiming purchase expenses:

You will not be able to claim any deductions for the expenses you incurred on purchasing your property. These may include the conveyance cost and stamp duty charges. When you sell your property, these expenses will be used while working out whether you need to pay capital gains tax.

Claiming interest on a loan:

You may claim an interest in the form of a deduction if you take a loan for your rental property. If you use a part of that loan money for personal use, you will not be able to claim interest on that portion. You will only claim that part of the interest that is linked to the rental property.

Conclusion:

Therefore, we can conclude here that the above points will eliminate all your doubts pertaining to rental income. You may talk to expert Quantity Surveyors to understand depreciation rules for rental property. When a rental property is rented out to family or dear ones at below market price, you must know what to do in such a scenario. Many property owners face difficulty in this situation. It is worth noting that you may claim a deduction for that tenure up to the rental income you received. You must have proper evidence of your income and expenses so that you can claim for things you are entitled to.