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What you need to know before the October 31 tax deadline

BMT team — Thu, 22 Aug 2024 22:30:10 +0000

If you’re completing your own tax return this year, the deadline for self-lodgement is October 31. With just a couple of months to go, here’s everything you need to know about the October 31 deadline and your tax entitlements. What is the October 31 deadline? The October 31 deadline is only applicable for self-lodge tax returns. The financial year ends on June 30, so this gives you roughly four months to complete and lodge your own tax return. If you’re using a tax agent you have until 15 May 2025 to lodge your tax return. What happens if investors miss the deadline? If you expect to receive a tax refund, you won’t be penalised for lodging your tax return late. Even after October 31, you’ll still be able to self-lodge your tax return via the MyTax website. However, if you owe the tax office money and miss the deadline, you’ll be fined $280 for every 28 days that your tax return is overdue. Even if the deadline has passed, it’s important to lodge as soon as possible. The easiest option to avoid potential penalties is by going through an accountant. Depreciation deductions and self-lodge tax returns Depreciation is one of the most lucrative tax deductions because it’s a non-cash deduction, meaning investors don’t have to spend money to be eligible to claim it. The Australian Taxation Office (ATO) allows owners of any income-producing property to claim depreciation for the building’s structure via capital works deductions and for the plant and equipment assets contained within the property. These deductions reduce taxable income for property investors and therefore reduce tax labilities. Although rare some property investors choose not to seek expert advice and self-assess deductions, putting themselves at risk of using the wrong depreciation rates and classifying items incorrectly. As a result, investors could be missing out on thousands of dollars’ worth of deductions. In residential properties, capital works deductions are claimed at a rate of 2.5 per cent per year for a maximum of forty years, while eligible plant and equipment assets must be depreciated over time using an effective life unique to each asset supplied by the ATO. Quantity surveyors are recognised under Tax Ruling 97/25 as one of the few professionals with the expert knowledge necessary for estimating construction costs for the purposes of calculating property depreciation. A quantity surveyor can assess a property and provide a comprehensive depreciation schedule which outlines depreciation deductions accurately. A tax depreciation schedule can also be used as evidence should the ATO complete an audit of an investor’s claims. Will a tax depreciation schedule increase an investor’s tax refund? A tax depreciation schedule is the best way to ensure you get the biggest tax refund possible. There is no item too small to consider including in a schedule. Low-cost assets and low-value assets all add up to maximise depreciation benefits. If an asset has sufficiently low value, legislation allows it to be written off much faster or even claimed in full immediately. A BMT Tax Depreciation Schedule covers all deductions available over the lifetime of a property (forty years) to ensure you maximise your cash flow. In FY 2023-24, BMT found residential clients an average of over $11,000 in first-year tax deductions. To find out more, Request a Quote or talk to our expert team on 1300 728 726 today.

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The capital gains tax implications of inheriting an investment property

BMT team — Sun, 25 Feb 2024 04:17:36 +0000

Property inheritance is the transfer of property to an heir or beneficiary upon the death of an owner. There are various tax implications triggered when inheriting an investment property, particularly where capital gains tax (CGT) is concerned. In the instance that an inherited property is sold immediately, the tax implications will be determined by factors around the date of acquisition and the type of use of the property by the previous owner from whom it was inherited. In this article BMT outlines the CGT implications of four different scenarios including: inheriting a property that was a main residence and selling it immediately inheriting an investment property and selling it immediately inheriting an investment property and living in inheriting an investment property and keeping it as an investment property Scenario 1: Inheriting a property that was a main residence and selling it immediately Let’s say that a beneficiary has inherited a property from a deceased family member and decides to sell the property rather than keep it. Will capital gains tax apply? Well, that will depend on the purpose of the property and the date the deceased acquired the property. The property will be exempt from CGT if: • the property was the main dwelling (i.e., was not used to produce income) from the time the deceased acquired the property until their death, and is sold by the beneficiary within two years • from the time the deceased died, the property was used only as the main residence of at least one of the following people: – the spouse of the deceased immediately before their death (but not a spouse who was permanently separated from the deceased) – a person who has a right to occupy the property under the deceased’s will – the beneficiary, if they dispose of the property as a beneficiary. If the property was used to produce income, i.e., it was an investment property, the property is not fully exempt. However, the beneficiary could qualify for a partial exemption. Scenario 2: Inheriting an investment property and selling it immediately Let’s now say a beneficiary has inherited a property which was used to produce an income – and never as a main residence. In this scenario the full CGT applies when selling. But if the inherited property was used as both a main residence and as an investment property, then a partial CGT exemption may apply. The partial exemption is calculated as follows: Capital gain (A) × non-main residence days (B) ÷ total days (C) = capital gain or loss (D) ExampleSally inherited her grandmother’s rental property which she sold immediately, resulting in a capital gain of $400,000 (A). The house was owned by Sally’s grandmother for twenty years (C), twelve (B) of which was used to produce an income. Sally will need to pay CGT on the time the property was income producing but will be eligible for an exemption for the time it was a main residence and will qualify for the fifty per cent discount as it was owned for longer than twelve months.The capital gain is calculated as follows: $400,000 × 4,380 days ÷ 7,300 days = $240,000 A B C DThe fifty per cent discount is calculated as follows: $240,000 x 50% = $120,000 A capital gain of $120,000 is then taxed at Sally’s marginal tax rate. In instances where an inherited property was used both as a rental and a main residence, but was the deceased’s main residence right before their death and disposed of within two years, the property is exempt from CGT. For inherited properties that were previously inherited a different tax implication applies. The formula for calculating the partial main residence exemption is adjusted if the deceased also acquired the property on or after 20 September 1985 as a beneficiary (or trustee) of a deceased estate. The main residence exemption is calculated according to the number of days the property was the main residence of the current owner and the previous beneficiaries. It’s important to note the main residence exemption is generally not available to foreign residents or if the deceased was a foreign resident. Scenario 3: Inheriting an investment property and living in it There are partial CGT exemptions available to people who inherit investment properties and live in them as their main residence. A person who inherits an investment property can claim the days the property was not used to produce an income under the main residence exemption in the event of selling. ExampleTom inherited a property from his father (James) which James used as a rental property for eight years. Tom lived in the property for ten years after taking ownership, which makes it his main residence. He is therefore eligible for the main residence exemption. Tom decides to sell the property after ten years of living in it, resulting in a capital gain of $350,000.The main residence exemption is calculated as follows: Capital gain × non-main residence days ÷ total days = capital gain or loss$350,000 × 2,920 ÷ 6,570 = $155,555 As Tom owned the property for longer than twelve months, he is also entitled to the fifty per cent discount. $155,555 x 50% = $77,777.50 In this scenario Tom will pay CGT on the $77,777.50 at his marginal tax rate instead of $350,000 under the main residence exemption and the fifty per cent discount. Scenario 4: Inheriting an investment property and keeping it as an investment property In scenarios where the new owner wants to continue using their inherited property as a rental property, a different set of tax implications and benefits apply. If the property was used as a main residence at any stage of ownership, it may be eligible for a partial exemption. The fifty per cent CGT discount will also apply in this scenario if the property is owned for […]

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Depreciation and landscaping

BMT team — Sun, 07 Jan 2024 23:21:29 +0000

When it comes to investment property depreciation, people mostly focus on the building and what’s inside, but the outdoors can be depreciable too. It is important to know that not all landscaping is depreciable; there is a difference in how ‘hard’ and ‘soft’ landscaping is treated in terms of depreciation. Hard landscaping, also known as hardscape, is the structural component or hard-surfaced area of the yard and assets. Sheds, retaining walls, outdoor tiles, seating and concrete walkways are examples. Assets such as these hold depreciable value and can be claimed using capital works deductions or plant and equipment depreciation, depending on which category it falls into. Soft landscaping, or softscape, includes the ‘animate’ areas of a landscaped space. Examples are grass, trees, plants and soil. Residential property investors can’t claim depreciation on these assets. Instead, soft landscaping improvements to the property may be included in the property’s cost base, giving the potential to reduce any applicable capital gains tax liability upon sale. Landscaping and construction expenditure explained The ‘act’ of landscaping itself is not tax deductible according to Subsection 43-70(2) of the Income Tax Assessment Act 1997, which says that construction expenditure specifically does not include expenditure on landscaping (or other costs like demolishing existing structures, clearing, levelling and draining). However, if physical capital works assets are purchased as part of a landscaping process, then these items are deductible as capital works assets. Examples of depreciable landscaping assets The following table highlights some of the common capital works depreciable and plant and equipment assets found in a rental property’s landscaping design. These items alone produce a total depreciation deduction of almost $21,000, highlighting how important it is to include outdoors items still eligible for deductions. Case study – Landscaping expenditure Ian’s investment property’s yard is severely damaged and he needs to carry out extensive landscaping works. This includes some earthworks, removal of debris, re-turfing and constructing a new brick retaining wall. Although Ian can’t claim depreciation or include the earthworks, debris removal and turf in his property’s capital expenditure, he may be able to claim these as repairs through his accountant. He can claim capital works deductions on the new retaining wall. This is because the retaining wall constitutes more than earthworks that simply created artificial landscapes. Getting it right with a specialised tax depreciation schedule A tax depreciation schedule is always the best option to ensure maximised and compliant depreciation claims are achieved. BMT site inspectors ensure the legislation is applied to ensure both indoor and outdoor assets are claimed correctly. To learn more about the BMT process, contact the team on 1300 728 726 or visit the BMT website.

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2023 Property Market Year in Review

BMT team — Mon, 20 Nov 2023 22:47:43 +0000

Despite ongoing interest rate hikes, high inflation and a subsequent ease in consumer spending, the residential property market has shown resilience with a 7.0% growth rate in the year to November 2023. As at the end of November, residential real estate constituted $10.3 trillion of Australia’s wealth, with superannuation at $3.5 trillion, Australian listed stocks at $2.8 trillion, and commercial real estate at $1.3 trillion following closely behind. RESIDENTIAL AND COMMERCIAL PROPERTY VALUES There has been renewed growth in the capital cities property market this year. Brisbane properties have shown growth at an impressive 10.7% over the past year and dwelling values are currently at a record high. Perth has taken a definitive lead at a growth rate of 13.5%, followed by Adelaide which has shown a slowdown from a significant 13.4% in November 2022 in comparison with a growth rate of 7.6% in November 2023. In Sydney, dwelling values increased by 10.2% over the past year, but are still below the record highs of January 2022 and Melbourne showed a respectable 3.0% growth over the past year. Canberra, Darwin and Hobart have struggled to get above the line this year with values falling by -0.3% in Canberra, -1.5% in Darwin and -3.0% in Hobart respectively. The rise in the value of regional property has also slowed across the country showing a more moderate growth rate of 3.4% as of November 2023 compared to the 10.1% growth rate seen at the same time last year, suggesting a potential downtrend in the tree change and a return to city life for many. PROPERTY SALES Most residential homes across Australia take approximately 32 days to sell, with 10.2% more properties on the market across Australia, than the same time a year ago. Perth has once again broken the trend, selling within less than 12 days, highlighting the lack of availability and rise in demand in the already heavily burdened property market in Western Australia. RENTAL PROPERTY MARKET As always, rental rates in the capital cities have shown significant growth at 9.7%, followed by a much more muted growth rate of 4.1% in regional areas. Rental rates across Australia as a whole have averaged 8.1%. According to CoreLogic, there has been a slight compression in gross rent yields nationally to 3.69%, which is down from 3.70% the previous month. LOAN APPROVALS AND CREDIT Covid era fixed rates expired this year, forcing many Australians into mortgage stress, spending well above the recommended 30% of their income on mortgage payments. In 2020 the average three – year fixed rate investor loan was at 2.2%. For some, this has now increased to a comparable variable rate loan of up to 7.21% with the Big Four banks, averaging 6.0% for owner occupiers and 6.49% for investors. Lending standards tightened for all residential and commercial real estate loan categories, but secured, tenanted investors are still positively favored by banks with investor finance comprising 35.6% of new mortgage lending through October. This share of investment lending was highest across NSW at 40.4% and is trending higher than the historic average at the national level. Most owner-occupier loans granted this year were first time buyers, comprising 28.9% of new owner occupier finance, which is well above the decade average of 24.2%. indicating a positive uptake of government schemes for this market segment. In terms of the number of dwellings approved for construction, both detached home – and unit approvals trended well below the historic 10-year average, with units trending even lower than detached homes. INTEREST RATES The 25-basis point Melbourne Cup Day rate hike has taken no one by surprise, leaving 1 in 4 lenders now with loans greater than their incomes according to the Reserve Bank of Australia. The number of Australians defaulting on their home loans, now surpasses the mortgage stress peaks of the Global Financial Crisis, however, returns on interest bearing investments, such as term deposits, have been favorable. Many mortgage customers have also found a way forward by refinancing their loans at more competitive rates. BMT NEWS As quantity surveyors, we have been steadfast in our approach to depreciation, believing that a physical onsite inspection will ensure an accurate and reliable depreciation schedule that will earn the owner the highest possible tax deductions. In 2023 our stance was validated by the Australian Institute of Quantity Surveyors, whose principal mission it is to establish and uphold professional standards at all times, maintain uniformity in procedures, support industry education, and foster public faith in cost certainty and the quantity surveying profession overall. Since opening its doors in 1997, BMT Tax Depreciation has completed more than 900 000 tax depreciation schedules to date, averaging first full financial year deductions of almost $9 000,00 in all residential properties and more than $15 000,00 in new properties, once again cementing our position as market leaders in tax depreciation. To maximise property tax depreciation deductions on your property, Request a Quote from us. The information in this article is sourced from CoreLogic and the Reserve Bank of Australia. This article is general in nature and should not be taken as advice or a guaranteed outcome.

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Our restaurant depreciation guide to help you claim thousands

BMT team — Mon, 21 Feb 2022 23:45:24 +0000

When it comes to providing customers with a high-quality dining experience, good food and service is only part of the equation. It is equally as important for a restaurant to make a great physical impression on diners; they will pay attention to the general ambience and the overall quality of items such as furniture, artwork and even the cutlery and glassware. For this reason, restauranteurs often outlay hundreds of thousands of dollars to create an impressive restaurant that will leave diners with a good taste in their mouth. Fortunately, many of the fit-out costs can be recouped through depreciation deductions. Depreciation is the wear and tear that occurs to a building and the items within it over time. The Australian Taxation Office allows commercial building owners and tenants to claim the wear and tear of the property’s structure and fixed items (capital works) as well as for the easily removable items within the property (plant and equipment). This means that restauranteurs can claim depreciation deductions for many assets installed during the fit-out of a restaurant. And many are surprised at just how lucrative these deductions are. The following case study shows just some of the restaurant depreciation deductions that can be claimed for common assets. Case study: Hotel A has recently changed hands. Among several other things, its facilities include a fine dining restaurant. The following table shows the plant and equipment deductions from the restaurant that are available to the new owners. The available restaurant depreciation deductions add up to an impressive $51,548 in the first financial year. Given that the hotel is a medium business and settlement took place in 2022, the new owners are entitled to the instant-asset write off. Not only does this make a significant impact on the restaurant’s cash flow, but the efficiencies resulting from the new fit out can reduce the operational costs of the restaurant. To ensure that restaurant depreciation deductions are maximised, contact a specialist quantity surveyor to arrange a comprehensive tax depreciation schedule, which will outline the deductions available for every eligible asset. A BMT Tax Depreciation Schedule applies all industry-specific legislation to ensure commercial depreciation deductions are claimed to their full potential and compliantly. BMT also applies current business incentives including the backing business investment and temporary full expensing depending on the business size, to ensure every cent is claimed. To learn more about the restaurant depreciation deductions available in a restaurant, pub, or café, visit the commercial property depreciation page on the BMT Tax Depreciation website. Disclaimer: The information provided in this article is based on restaurant size, date of acquisition, size of business entity etc. This information is not to be used as a quote or guaranteed tax depreciation amount. Contact BMT for a specialised tax depreciation schedule.

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Three facts about investing in commercial warehouses

BMT team — Wed, 12 Jan 2022 05:55:42 +0000

The demand for modern warehouses has grown significantly in recent years. Since warehouses are centres for many forms of logistics activity, warehouse investment is on the rise. It doesn’t look like this growth will slow down any time soon, with CBRE predicting e-commerce will drive requirements for an additional 350,000 SQM of new space each year. Here are three facts to know about investing in commercial warehouses. Fact 1: There are a variety of warehouse investment types Different types of commercial warehouses fit different purposes. Broadly, a warehouse will fall into one of four categories. Production warehouse: This type of warehouse is used to manufacture and produce goods. Typically located within a manufacturing or production site, a production warehouse will hold stocks of raw materials to ensure there is always enough supply to make the manufacturer’s product. Storage warehouse: This warehouse type is often used for long-term storage of inventory or finished goods. Storage warehouses may also be used to store the components needed to create the finished product, so that they are available quickly when required. Fulfilment warehouse: Also known as a distribution centre, this type of facility serves as the link between suppliers and customers. A fulfilment warehouse moves goods along quickly, acting as a centre for order fulfilment, packaging, labelling and transportation. Technology is often used to improve cost and efficiency, and hence customer service. Sorting and consolidation warehouse: Rather than being used for storage, this type of warehouse receives inbound shipments from several suppliers and sorts the items according to their end destination. This type of warehouse might combine smaller shipments into larger, more economical loads intended for the same area. Fact 2: Warehouses may use manual labour or automation Some of the more traditional warehouses use manual handling systems, operating in a non-automated way. In these facilities, operators manually move the goods with equipment such as forklift trucks, conveyors and pallet trucks. Semi-automated warehouses are more high-tech than traditional warehouses, but manual handling still plays an important role. A company might opt for a semi-automated solution if there are safety issues or a high number of manual handling errors impacting profitability. A pallet shuttle system is an example of a semi-automated solution, where an operator places the pallet in the first position of a storage channel using a forklift, then a motor-driven shuttle loads and unloads the pallets. Fully automated warehouses use state-of-the-art mechanised technology to maximise warehouse efficiency. This kind of warehouse uses robotics to assist humans with retrieval, moving, sorting and picking. This machinery helps to save on labour costs and improves both efficiency and operational safety. Due to the additional equipment required for automation there will be more plant & equipment depreciating faster than the building, and therefore higher deductions may be available. Fact 3: Warehouse investment yields lots of tax deductions BMT wants to remind both industrial space investors and the businesses that operate from them to ensure they are claiming every tax deduction they are entitled to. Depreciation is the natural wear and tear of the commercial warehouse and its fit-out, which can be claimed to reduce taxable income. The sheer size of the structure of a warehouse generally means that there are ample capital works deductions available. Depending on the warehouse type, the capital works deduction fixed rate can change. For example, currently manufacturing industries (including warehouses used for manufacturing) capital works deductions are calculated at a fixed rate of 4 per cent. Storage and distribution warehouses capital works deductions are depreciated at a rate of 2.5 per cent. The other side of commercial warehouse depreciation is the fit-out. This is usually owned and claimed by the party that is using the warehouse as their business operations. These assets depreciate at a rate based on their effective life as set by the Australian Taxation Office. A business that owns a new warehouse with a fit-out including shelving, machinery like forklifts, picking/packing equipment and office furniture could reasonably expect to claim a first full year depreciation deduction of $140,000 and $2,700,000 in total (this does not consider business incentives such as temporary full expensing and backing business incentive). Tax depreciation schedules are the key to claiming the maximum depreciation deductions when investing in commercial warehouses. A BMT Tax Depreciation Schedule applies all industry specific legislation to ensure commercial depreciation deductions are claimed to their full potential and compliantly. BMT Tax Depreciation has optimised its commercial process to ensure both owners and tenants claim the most deductions possible. To learn more about commercial warehouse depreciation, call BMT today on 1300 268 628.

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Depreciation implications when living in a rental property

BMT team — Sun, 17 Oct 2021 23:21:39 +0000

Property owners will often move in and out of a property, changing it from a main residence to an investment and vise versa. At BMT, we hear many clients asking questions about the implications this has on depreciation. In this article, we discuss how this works. Plant and equipment depreciation implications Let’s start with the depreciation implications on the easily removable or mechanical assets in an investment property, known as plant and equipment. Examples include floor coverings, hot waters systems, air conditioning units and light fixtures and fittings. Since legislation changes came into play in late 2017, depreciation on pre-existing plant and equipment assets in residential second-hand investment properties can no longer be claimed. The key factor here is the ‘previously used’ provision – any existing plant and equipment assets will be deemed second-hand. The previously-used provisions also apply to brand-new assets installed while an owner lived in a property, and brand-new assets that existed before the owner moved into and out of the property. This means that if an investor has lived in their rental property for any length of time after 1 July 2017, all existing plant and equipment assets are ineligible for depreciation deductions. So, if an investor is both renovating and looking to maximise the tax deductions on their property, we would recommend they avoid living in the property during the renovation to make sure depreciation can be claimed in full. However, in the instance where the ‘incidental or occasion’ exception applies, an investor could still claim full depreciation if they have temporarily stayed at the property. This is a very grey area and the tax commissioner usually considers this to be a few nights or weeks, but it is based off the individual scenario. Capital works depreciation deductions The second, and usually largest, part of any depreciation claim is capital works deductions. Capital works depreciation deductions can be claimed for the wear and tear of a building’s structure and permanently fixed items, over a period of forty years. The 2017 legislation changes don’t impact capital works depreciation deductions, these deductions simply become unavailable during the period the investment is lived in by its owner. For example, if a property was built in 2000 then capital works deductions on the original structure cost are still available until 2040. However, if the owner lived in the property from 2010 to 2015, they will miss out on claiming those five years’ worth of capital works depreciation deductions. Living in an investment then making a substantial renovation, what happens? The Australian Taxation Office defines a substantial renovation as: “substantial renovations of a building are renovations in which all, or substantially all, of a building is removed or is replaced. However, the renovations need not involve removal or replacement of foundations, external walls, interior supporting walls, floors, roof or staircases.” When a property is substantially renovated most rooms in the property are affected and many depreciation deductions that weren’t there before are now available from new assets and structures. However, it’s crucial to remember that even during a substantial renovation an investor intending to rent the property out shouldn’t live in it during this time. This will create the same issue of the new plant and equipment assets being classed as previously used. But what happens when an investor purchases an investment property that has been substantially renovated? If the renovation took place immediately before the sale, then all depreciation deductions will be available, as if the property is brand-new. If the property was rented between the time it was substantially renovated and sold, the new owner needs to establish just how long it was previously rented for and if the previous owner claimed depreciation over that time. If this period exceeds six-months or depreciation was claimed on the assets, then the 2017 legislation changes will apply, removing the ability for the owner to claim depreciation on the plant and equipment. However, if the property is renovated, rented, and sold within a six-month time frame with no claim by the previous owner, then all depreciation deductions are up for grabs by the new owner – including the plant and equipment items installed during the renovation. For more information on the depreciation implications of living in an investment, call BMT today on 1300 728 726.

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Here is what you need to know about inheriting an investment property

BMT team — Mon, 11 Oct 2021 22:44:08 +0000

People who find out they are inheriting an investment property have important decisions to make. In this article we look at two of the options – to keep using the property as an investment before selling it or to live in it before selling it. Each scenario has its own unique factors to consider, including taxation implications. Scenario one: Continue to use property as an investment before selling This could be a good way to either grow an existing investment property portfolio or get a step on the property investing ladder. But it’s important to understand the tax implications. Firstly, any rental income received from the property will be taxable income for the new owner. Tax deductions associated with the property, such as interest repayments, insurances, council rates, maintenance costs and property management fees, will also be deductible for the new owner. To claim the costs associated with the property at tax time, property owners are required to keep records of the costs. But how do they claim depreciation, which doesn’t require a financial outlay? Depreciation is the natural wear and tear of property and assets over time. Owners of income-producing properties can claim this depreciation as a tax deduction each financial year. To do this, they need a tax depreciation schedule prepared by a specialist quantity surveyor. This is a report that outlines every depreciable item of the property, which an accountant uses to determine the depreciation deduction. The new owner also needs to be aware of the capital gains tax (CGT) implications at the time of sale. Paying CGT when inheriting an investment property is complicated and largely depends on how the property was used and how long the new owner held the property before it was sold. These are the main contributing factors of whether the property will be fully or partially CGT exempt, or not at all. If the property was purchased before 20 September 1985 (the date that CGT was introduced) and the new owner sold it within two years, then the property is fully exempt from CGT. It gets slightly more complicated where a property was purchased after this date. If the property was purchased after 20 September 1985 , and if the new owner acquired the investment property after 20 August 1996, then a full CGT exemption won’t be available. However, they may be able to get a partial exemption and the individual’s accountant will assess this when it comes time to calculate any CGT. Scenario two: Live in the property before selling it The first thing to know in this scenario is that a current fixed lease must be honoured. This means the present tenant can stay at the property until the lease period ends or an earlier date is agreed to by all parties. It’s important that the new owner remembers that while the property is still leased, they can claim tax deductions even if it’s not for a full financial year. Pro-rata deductions can be applied to any type of tax deduction including interest repayments and depreciation. If the property is the new owner’s main residence prior to sale, they will be partially CGT exempt. The only scenario where a full CGT exemption would apply would be if the property was the previous owner’s main residence and it hadn’t been rented out. For more information on how to make the most out of an inherited investment property, contact BMT on 1300 728 726 or Request a Quote.

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4 features of MyBMT that help accountants

BMT team — Mon, 21 Jun 2021 00:32:46 +0000

It’s not uncommon for property investors to notify their accountant that they have purchased an investment property, or made improvements to one, quite late in the financial year (or to forget to tell them altogether). We can’t prevent this, but we do offer a tool to help save you valuable time – MyBMT. What is MyBMT? MyBMT is a free portal that allows you and your clients to seamlessly manage property depreciation needs in one place. It stores depreciation schedules and allows details to be shared between a property owner and their accountant. MyBMT has a number of features to help accountants, especially during the busy time of year. Find client tax depreciation schedules easily You can create your own office MyBMT profile, linked to your work email address. Once you set up your MyBMT account and your client has given BMT permission to share their schedule with you, you will be able to view their schedule and depreciation details through MyBMT. If you have many clients, it’s easy to sort through the list of schedules using the multiple search functions available, including searching their name, the entity name or property address. Be kept informed on schedule updates You can view a client’s schedule status and progress. Once the schedule is ready, you will have the ability to download a PDF or excel copy, request it as a CSV file, make enquiries and submit amendments or request updates on your client’s behalf. For example, if your client has added an asset to the property or made a renovation you can make a schedule-update request through MyBMT to reflect this. If a client is yet to get a schedule, you can also order one through MyBMT on their behalf. Once we receive the request, you will have access to the quoting process and be able to view a preliminary depreciation estimate through the portal. Get interactive depreciation figures A PDF, excel or CSV file might not be the best format for you. To help with this, your client’s MyBMT schedule page has a specified depreciation deductions section. This section provides summaries of the three key depreciation figures you need to include in your client’s tax return – the Division 43, Division 40, and Division 40 pooled asset deductions for the financial year. Each summary has the deductions available using both the diminishing value and prime cost methods. If you want the figures for a specific Division 40 asset, you can filter it in this section too. For example, if you’re looking for details on the property’s carpet depreciation, simply type the asset name or category and all matching details will appear – including the total cost, effective life, depreciation rates with the respective yearly deduction and the written down value. You can also find more details on the Division 43 assets. The breakdown of this section will provide the deductions for the original capital works and any added capital improvements resulting in more deductions. The two categories are split so that the deductions are in proportion to their full forty-year period. Reduce paperwork and filing MyBMT has a files section for every account so items like images, invoices and receipts can be uploaded here ready for tax time. The expenses are also sorted in the Australian Taxation Office item numbers to make recording simpler. Register for MyBMT today and make tax time easier You can register for MyBMT at any time. It’s completely free and can make your job easier at tax time. To learn more about the platform and register, visit MyBMT today.

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Help investors find the hidden deductions through quality work

BMT team — Mon, 21 Jun 2021 00:28:07 +0000

Depreciation is one of the biggest tax deductions that a property investor can claim, yet far too many people fail to take full advantage of it. There are several reasons for this. Some people automatically dismiss depreciation, thinking that it doesn’t apply for their second-hand property. Others simply don’t know it exists. One of the biggest, and completely unavoidable, reasons investors miss out is cutting corners where their tax depreciation schedule is concerned. Tax depreciation schedules must be prepared by an expert A tax depreciation schedule prepared by a specialist quantity surveyor ensures all legislative requirements are followed and that every depreciable part of a property is identified. ATO compliance can also be maintained in the case of an audit. This schedule can be used for the lifetime of the property and can be updated if any improvements are made, providing the perfect base for all future depreciation claims. Depreciation is the only non-cash deduction available to property investors, meaning that no money needs to be spent to claim it. The cost to prepare the schedule is also tax deductible. A specialist will find all the deductions An investment property may contain many discreet depreciable items tucked away behind walls, doors, underground or up high out of sight. For things like electrical wiring behind walls, a quantity surveyor will verify the depreciable value to ensure all future depreciation claims are accurate. For something really obscure, such as solar panels on a roof or an internal air-conditioner grille, the quantity surveyor will not only identify the asset in the first place but will cost it accordingly. Another way a specialist finds hidden deductions is through identifying renovations and extensions made by a previous owner. Even if the renovation was made 20-plus years ago, substantial depreciation deductions could still be there to claim. Hidden deductions make a big difference The following table shows total depreciation deductions for some of the concealed items that can be found in an average sized 200sqm house. These are just some of the hidden deductions that could be claimed. But by doing so, cash flow can be boosted by tens of thousands over the lifetime of the property investment. The expert team at BMT conduct physical site inspections to ensure nothing is missed. Our specialist site inspectors go to the property and leave no stone unturned, resulting in every depreciable item and qualifying structure being found. If you would like to organise a 100 per cent obligation-free tax depreciation schedule quote for a client, contact us today on 1300 728 726.

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