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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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Should you furnish your rental property?

BMT team — Thu, 07 Mar 2024 22:12:14 +0000

Have you considered leasing out your investment property furnished? When you furnish a rental property, the furnishings become part of the Division 40 plant and equipment assets allowing you to claim depreciation deductions for the wear and tear of the furniture over their effective lives, reducing your taxable income. To help you weigh up the pros and cons of renting out your property furnished, BMT has answered some commonly asked questions when it comes to rental furnishings. Q: Is furniture tax deductible for rental property? A: In most cases, furniture purchased by an investor for an income-producing property will attract depreciation deductions. Depreciation refers to the natural wear and tear a property and its assets experience over time. The Australian Taxation Office allows investors to claim a deduction for this wear and tear. Furniture within an income-producing property is typically claimed as a plant and equipment deduction, which refers to the easily removable items within an investment property. To be eligible to claim depreciation for furniture within a rental property, you must: purchase the items when the property is income-producing or genuinely available for rent directly incur the cost of the furniture. Q: What’s the easiest way to claim deductions for furniture? A: A tax depreciation schedule is the best way to ensure you claim all the deductions you’re entitled to. A BMT Tax Depreciation Schedule covers all deductions available over the lifetime of a property (forty years) and is 100 per cent tax deductible. During the FY 2022-2023, BMT found residential property investors an average first year deduction of almost $9,000. Q: Can I claim deductions on second-hand furniture? A: The short answer is no. While second-hand furniture can be a cost-effective option, it’s ineligible for depreciation deductions. This is due to 2017 legislation changes that disallow depreciation deductions to be claimed on second-hand plant and equipment assets. This includes those that still have remaining depreciable value. Q: Can I charge higher rent if the property is furnished? A: A landlord can typically charge a higher rental rate for a furnished property. Depending on your location and property type, you may be able to charge between 15 to 70 per cent more. While this seems like a fantastic return on an investment, any landlord considering furnishing a rental property should first consider the reduced tenant demand. Most tenants are looking for unfurnished property, so be sure to assess your local property market carefully. Q: What type of tenants will a furnished property attract? A: Furnished properties typically attract travellers, young tenants who haven’t accrued their own furniture and business professionals who frequently move for work. With this in mind, furnished leases reflect the intermittent nature of such tenants and are usually between three and six months long. These types of leases are usually suited to major metropolitan areas or smaller regional centres that have a fly-in fly-out lifestyle. Q: What happens if my furniture is damaged? A: If the lease states that you are renting out a furnished house with appliances, then you’re not only responsible for keeping the building in good shape, but the furniture and appliances as well. However, if the tenant damages your belongings, you may be entitled to make an insurance claim so it’s important to have proper cover. Landlord insurance is a type of insurance policy designed to protect property investors from tenant-related risks including loss of rental income and malicious or accidental damage caused by the tenant. As landlord insurance is an investment expense, it can also be claimed in your annual tax return. It’s important to note that each landlord insurance policy will differ. For more information, contact BMT Insurance on 1300 268 467. Q: When is it a good idea to have an unfurnished property? A: An unfurnished property is more likely to appeal to tenants looking for a home over the long-term. Typically, this means that leases will be for six to twelve months. Some tenants prefer the opportunity to furnish the property and can be put off by a landlord’s furniture. This is especially the case if a tenant already has their own furniture that would need to be stored elsewhere. If you’re undecided on what to do, perhaps advertise your rental as unfurnished and include the option to have it furnished for additional rent in the listing description. There are a number of advantages and disadvantages to furnishing an investment property. It’s important for investors to consider their personal circumstances before making a decision.

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Tax deductions every agribusiness owner should claim

BMT team — Sat, 20 Jan 2024 05:05:16 +0000

Agribusiness is satisfying but tough. Farmers often experience times of financial hardship due to circumstances out of their control. Droughts, floods and commodity price fluctuations can all dramatically affect a farmer’s bottom line each season. But agribusiness isn’t just about the season. It’s about long-term planning and making decisions now that will produce results in the future. Claiming depreciation is just one of the ways farmers can prepare for a more sustainable agribusiness. The Australian Taxation Office (ATO) governs legislation that allows owners of any income-producing property to claim depreciation every financial year. These deductions can help boost a farmer’s cash flow and alleviate the pressure of farming during an unforgiving season. The additional funds you receive at tax time can then be used to buy more stock or cover any outstanding expenses you need to pay. So, what is depreciation and are you eligible to claim it? Contents Depreciation for agribusiness Agribusiness case study Maximise the return on your agribusiness Depreciation for agribusiness Depreciation is a tax deduction for the gradual wear and tear of an income producing building and its assets over time. It’s often missed by agribusiness owners because it’s a non-cash deduction, meaning you don’t need to spend money in order to claim it. In fact, research has shown that 80 per cent of owners are missing out on the depreciation deductions they’re entitled to. A deduction can be claimed for any building structure via capital works deductions and depreciaiton can be claimed for the plant and equipment assets. Plant and equipment assets refer to items which can be easily removed from the property and have a limited effective life as set by the ATO. While most fixtures and fittings can be depreciated following standard procedure, certain assets used in agribusinesses must be calculated using special rules. These assets are as follows. Water facilities used to conserve or convey water Primary producers can fully deduct capital expenditure on a water facility if the expense was incurred on or after 7:30pm AEST on 12 May 2015. Primary producers fully deduct the expenditure in the income year in which they incurred it. The total deduction cannot be more than the amount of the capital expenditure. No deduction is available for capital expenditure incurred on acquiring a second-hand commercial water facility unless you can show that no one else has deducted or could deduct an amount for earlier capital expenditure on the construction, manufacture or previous acquisition of the water facility. The previous UCA (uniform capital allowance system) rules of depreciation apply where expenses were incurred prior. Fencing assets The cost of capital expenditure of fencing assets can be fully deducted if the expenditure was incurred at or after 7.30pm (AEST) on 12 May 2015. The total deduction cannot be more than the amount of the capital expenditure. The term ‘fence’ takes its ordinary meaning and includes an enclosure or barrier, usually of metal or wood, as around or along a field or paddock. The term ‘fence’ extends to parts or components of a fence including, but not limited to, posts, rails, wire, droppers, gates, fittings and anchor assemblies. The capital expenditure incurred on the construction, manufacture, installation or acquisition of the fencing asset must have been incurred primarily and principally in a primary production business that you conduct on land in Australia. The lessee of the land is also eligible to claim these deductions for fencing assets. Fodder storage assets If a cost was incurred on a fodder storage asset, it can be immediately deducted in the income year it was incurred, if the expense was incurred either: on or after 19 August 2018, or before 19 August 2018, but the asset was first used or installed ready for use on or after 19 August 2018. If the capital expenditure was incurred after 7.30pm (AEST) on 12 May 2015 but before 19 August 2018, and the asset was first used or installed ready for use before 19 August 2018, one-third of the expenditure can be deducted in the income year in which the expenditure is incurred, and the same amount in each of the following two income years. Horticultural plants (including grapevines) Deductions for the decrease in value of horticultural plants can be claimed by primary producers, under the following conditions: Ownership of the plants (including lessees and licensees of land, who are considered as owners of the horticultural plants on that land). Use of the plants in a horticulture business to generate assessable income. The expense was incurred on or after 9 May 1995 (or for grapevines, on or after 1 October 2004). If you are a primary producer and a small business entity, you can choose to work out your deductions for water facilities, fencing and fodder storage assets under either the simplified depreciation rules or these UCA rules. Horticultural plants can only use UCA to work out deductions. According to the Tractor Machinery Association of Australia, $5.6 billion was spent on agricultural machinery in Australia in 2022, an estimated increase of nine per cent from 2021. Given that farmers are continually updating their plant and equipment assets, it’s essential to organise a tax depreciation schedule this financial year. Agribusiness case study The farmer owns an 800-acre dairy farm in regional Victoria, which he purchased for $3,626,000. The business identifies as a small business entity. The farmer decides to enlist BMT Tax Depreciation to prepare a tax depreciation schedule after hearing about the deductions he could claim. Examples of some of the deductions he can claim include cattle laneways, water dams, sheds, fences, dairy milking sheds, dairy yards and milking systems. From the tax depreciation schedule, he finds out he can claim a huge $345,300 in depreciation deductions in the first financial year alone and a massive $1,575,000 in the first five cumulative years. View the full case study on the 800 acre dairy farm Maximise the return on your agribusiness BMT found agricultural clients an average of $96,458 in first full year depreciation deductions in the 2022/23 […]

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The BMT process: who does what?

BMT team — Mon, 25 Sep 2023 22:45:13 +0000

Research shows that around 80 per cent of property investors are missing out on depreciation claims. If you’re one of those property investors, you could be missing out on thousands of dollars each financial year. Fortunately, arranging a BMT Tax Depreciation Schedule is simple and stress-free. BMT Tax Depreciation takes a comprehensive approach to preparing depreciation schedules for both residential and commercial property to ensure every deduction is maximised. In this article we will look at: An overview of the BMT process Quantity surveyors in the BMT process Property managers in the BMT process Accountants in the BMT process An overview of the BMT process The BMT process begins when you request a quote for a tax depreciation schedule. This can be done by phone or online. Once you’ve requested a quote, we’ll collect the basic information we need from you in one go and do some initial calculations to ensure the schedule is worthwhile. This includes simple details like: the name you would like to appear on the report the property address purchase information you property manager and accountant details. For residential investors, we can then contact your property manager or tenant to arrange access for a property inspection. Using their expertise, BMT site inspectors will thoroughly assess the capital works and plant and equipment assets found within your property. In the case of apartments or strata complexes, this includes all common property items where legislation allows. From there, our depreciation and tax specialist team will review the information gathered, do additional research to establish construction and purchase dates, check for any additional works and prepare your tax depreciation schedule. We can even forward your schedule to your accountant directly, saving you time. Given the 2017 legislation changes, it’s essential to contact a specialist quantity surveyor to assess your property. Both new and old residential investment properties have substantial depreciable value. On average, we find residential investors a first full financial year claim of almost $9,000. In commercial properties, both the owner and tenant can claim depreciation deductions. Our tax depreciation schedule can include separate reports where multiple entities or tenants control different assets or have different acquisition dates. All schedules for commercial property are prepared according to their particular industry. We’ve completed thousands of schedules for all commercial property types including agricultural industries, manufacturing, automotive and mechanical, industrial and warehouse, hospitals and medical centres. Using industry specific legislation, a specialist site inspector will assess your property to ensure every deduction is uncovered and maximised. This includes any fit-out installed or assets removed during an upgrade or renovation. When construction work or assets are removed from a property during its income production period, there is often remaining unclaimed depreciation that can be written off. BMT staff are experts at calculating this residual amount and will make the necessary adjustments to your schedule. Now that you have a good understanding of the BMT process, let’s look more closely at the specialists involved. Quantity surveyors in the BMT process Quantity surveyors are qualified professionals who specialise in building measurement and estimating the value of construction costs. They get involved at various stages throughout a buildings construction and use their skills to ascertain the costs of building works on any project. A specialist quantity surveyor: documents every qualifying asset in a property calculates their depreciable value to ensure that the investor maximises their deductions ensures full compliance with Australian Taxation Office (ATO) regulations, meaning all deductions are accurately evidenced in the event of an audit. To work as a quantity surveyor in Australia, you’re required to gain qualifications in quantity surveying or construction management by competing a university degree. You’re then required to do two years’ worth of logbook experience before undergoing a panel interview with the Australian Institute of Quantity Surveyors (AIQS) and the Royal Institution of Chartered Surveyors. When looking for a quantity surveyor, check that they use their own specialist staff rather than contractors for parts of the process. This is important in the evidence of an audit or if the ATO have any questions regarding the process. Another crucial thing to be aware of is referral fees. Ensure that there are no referral fees or kickbacks being paid. You want to use the best in the business, not the quantity surveyor who is paying the most. It’s also important to be aware that not all quantity surveyors specialise in tax depreciation. Only a tax depreciation specialist such as BMT can be relied on to maintain detailed knowledge of all current ATO Tax Rulings relating to depreciation. Property managers in the BMT process As a part of the BMT process, we will collect the necessary information on who to contact in order to arrange a site inspection. As properties need to be income producing before depreciation can be claimed, we’ll often need to speak with your property manager to arrange access to your investment property. We’re flexible with these arrangements to ensure minimal disruption to your tenant during this period. Working with your property manager allows for easy organisation, helps the tenant or tenants to understand why the site inspection is taking place and eliminates admin for you as the landlord. BMT also provides a number of services and tools to help inform property managers on depreciation benefits including New to Rent. New to Rent gives property managers complimentary depreciation estimates tailored to each rental property listed by their agency. The estimates highlight the difference depreciation can make to your cash flow and will help you to determine your after-tax position. Accountants in the BMT process Your accountant is often one of the last to find out about your investment property. This means there’s often a lot of last minute activity to be completed within a short timeframe to ensure that your claim is maximised at the end of each financial year. That’s where BMT can help. A BMT Tax Depreciation Schedule provides accountants with all the necessary information to lodge an accurate claim. We also provide access to MyBMT that […]

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Commercial property tax deductions for owners

BMT team — Sun, 30 Jul 2023 16:30:48 +0000

Navigating the world of commercial property investment isn’t always easy. Investors must consider economic factors like population growth and demand to work out if it’s worthwhile investing in a commercial property. As with residential investment, there are many ongoing expenses involved with owning a commercial property which can sometimes deter investors from making the leap into commercial property investment. It is important to be aware of the deductions available to investors which make holding a property much more affordable. Here are some common commercial property tax deductions available to investors. Contents Maintenance and management costs Depreciation Depreciation: capital works Depreciation: plant and equipment Renovations BMT are the commercial depreciation experts Maintenance and management costs According to legislation governed by the Australian Taxation Office (ATO), commercial property owners can claim deductions for related expenses for the period their properties are rented or available for rent. Owners can claim an immediate deduction for any expenses relating to the maintenance or management of their property. This may include things like interest on loan repayments, leasing agent fees, council rates, air conditioning repairs, water leaks, cracked tiling or replacing smoke alarms. Depreciation Depreciation is a lucrative deduction available to owners of income-producing properties. As a building and its contained assets age, they depreciate in value. ATO-governed legislation allows owners of investment properties to claim a tax deduction for this wear and tear called depreciation. Owners can claim under two different categories, capital works or division 43 and plant and equipment or division 40. Depreciation: capital works Capital works is the deduction for the building’s structure and any permanently fixed assets. It is commonly referred to as building write-off and can be claimed at either 2.5 per cent over forty years or 4 per cent over twenty five years depending on the property’s construction commencement date. For more information, read BMT Tax Depreciation’s tax depreciation overview. Commercial properties qualify for capital works deductions if construction started after the 20th of July 1982. Examples of qualifying capital works assets include roofs, bricks, mortar, wiring, walls, windows, flooring and other permanently fixed assets. Depreciation: plant and equipment Owners can also claim for plant and equipment assets they own or those which are left behind by tenants. Plant and equipment refers to assets that can be easily removed from the property and includes items like rangehoods, ovens, carpets and air conditioning. Plant and equipment depreciation is calculated based on each asset’s individual effective life as determined by the ATO. Effective life and depreciation rates for commercial and residential assets can be found on BMT Tax Depreciation’s Rate Finder tool. Renovations Commercial property owners can claim depreciation for renovations on their properties including those completed by previous owners. This includes things which may not be so obvious, like updated plumbing, water-proofing and wiring. For renovations of a structural nature to qualify for capital works deductions, they must have commenced within the qualifying dates set by the ATO. BMT are the commercial depreciation experts To maximise the depreciation claim for your commercial investment property, it’s important to engage specialist Quantity Surveyors such as BMT for a tax depreciation schedule. BMT is the largest and most successful tax depreciation company in Australia with extensive experience in creating comprehensive, ATO-compliant schedules. BMT has prepared tax depreciation schedules for commercial properties ranging from primary production, manufacturing, retail centres, mining, office towers, medical centres, traveller accommodation and many more. Find our more about BMT Tax Depreciation’s extensive experience with our Commercial Capability Statement. If you’re considering commercial property investment, contact BMT on 1300 728 726. Alternatively, if you need a quote for your existing commercial property, request a quote here.

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What to be aware of when buying a property with an SMSF

BMT team — Wed, 19 Apr 2023 01:30:36 +0000

Did you know it’s possible to buy an investment property through a self-managed super fund (SMSF)? An SMSF is a private superannuation fund that can have between one and six members. All members are responsible for decisions made about the fund and compliance with the relevant legislation. It’s common for SMSF trustees to consider purchasing investment property through their fund. However, the process is often complex, particularly when it comes to borrowing money. Before buying property through your SMSF, you must be aware of the specific rules and regulations that apply. In this article we will look at: Buying investment property with an SMSF Borrowing money when buying property with an SMSF Recent laws affecting SMSFs Can you claim depreciation for an SMSF investment property? Buying investment property with an SMSF In order to buy property through an SMSF, you must abide by the following requirements. The property must: Meet the ‘sole purpose test’ of solely providing retirement benefits to fund members Not be acquired from a related party of a fund member Not be lived in by a fund member or any fund members’ family Not be rented by a fund member or any fund members’ family. While a property cannot be rented or lived in by a fund member or their relatives, most SMSFs are entitled to purchase their personal business’s premise, allowing the business to pay rent directly to their SMSF at the market rate. This is particularly appealing to small business owners. Compared to other asset types, investing in property often attracts higher fees and charges which can reduce your super balance. It’s important to be aware of any fees including legal costs, stamp duty, property management expenses and bank fees before signing up. Borrowing money when buying property with an SMSF It’s possible to borrow money when purchasing property through an SMSF, however it must be done under strict conditions referred to as a limited recourse borrowing arrangement (LRBA). An LRBA involves an SMSF member taking out a loan to purchase a single asset, in this case a property, which is held in a separate trust. Any investment returns earned from the property go to the fund. If the SMSF defaults on the loan, no other assets within the SMSF are affected. A personal guarantee can be required so the individual’s assets could be affected. The SMSF generally needs to have a minimum balance of $180,000 to be able to purchase a property and an annual contribution of at least $15,000. In addition, most lenders require an SMSF to have at least 30 per cent of the value of the property as a deposit and often charge a higher rate of interest. As borrowing to invest can sometimes be considered high risk, it’s best to discuss your borrowing options and LRBA with a trusted financial adviser. Recent laws affecting SMSFs Concessional contributions are the funds that go into your super account from your before-tax income. The concessional contribution limit is now set at $27,500 , while the after-tax or non-concessional limit is $110,000 . Individuals can make extra concessional contributions above the $27,500 limit if they have haven’t used the entire concessional cap amounts from previous years. To use an unused cap, the individual’s total super balance must be less than $500,000 at the end of 30 June the previous financial year and have made concessional contributions in the financial year that exceeded the individual’s general concessional contributions cap. Individuals can re-contribute amounts they withdrew between 1 July 2021 and 30 June 2020 under the COVID-19 early release of super program without them counting towards their non-concessional contributions cap. The ‘bring-forward rule’ allows a trustee to contribute up to three years’ worth of non-concessional contributions in one year. From the 2022–23 financial year members who are under 75 may be able to access a bring-forward arrangement as outlined in the table below. The way the ATO calculates a trustee’s total super balance (TSB) has also changed. In certain circumstances, an individual’s LBRA amount will be factored into their TSB if the loan contract was entered into on or after 1 July 2018. This will apply if: The LBRA is with an associate (relative, other member of SMSF, partner or company) of the fund. All members of the fund whose interest is supported by the asset purchased using the loan must include the LBRA in their TSB calculations. A member of the fund met a condition of release with a nil cashing restriction. If your TSB is greater than $1.7 million from 2021-22, you can no longer make non-concessional contributions. The ATO also made changes to the way an SMSF can buy assets such as property. A property purchased through an SMSF must be done on an ‘arm’s-length basis’, meaning that a transaction made by the fund must reflect the true market of the asset. Any income made from that asset must also reflect the true market rate of return. For example, an SMSF trustee cannot purchase a house to be rented by their son at a lower rental rate. If there is not adequate documentation to prove the money provided by a related party was actually borrowed, the amount provided by the related party might be considered to be a contribution received by the fund. This could lead to significant tax consequences if it results in a contributions cap being exceeded. Can you claim depreciation for an SMSF investment property? There are tax implications when the trustees of an SMSF choose to invest in real estate. As with any other property investment, SMSF trustees who invest in real estate are entitled to claim capital works deductions for the wear and tear of a building’s structure as well as depreciation for any eligible plant and equipment items. It’s important that SMSF trustees take advantage of the additional funds available via a depreciation claim. BMT Tax Depreciation can prepare depreciation schedules for trustees with an investment property to help maximise their claims. […]

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Benefits of partial year depreciation deductions

BMT team — Sun, 20 Nov 2022 23:00:56 +0000

When property investors are preparing their annual income tax return, it’s important to organise a tax depreciation schedule for any recently purchased properties. Even if you have purchased a property in the lead up to the financial year and only owned it for a short period of time, there are still depreciation benefits. Partial year depreciation deductions can be maximised by your quantity surveyor by applying a pro-rata depreciation calculation, resulting in extra cash for you. In this article we will explore: Partial year depreciation deductions Immediate write-off Low-value pooling Talk to an expert Partial year depreciation deductions Investors can claim pro-rata depreciation deductions for the period their property is rented out or is genuinely available for rent. That is, the property is given broad exposure to potential tenants and considering all the circumstances tenants are reasonably likely to rent the property. This is particularly important for holiday homeowners as the property may only be rented during peak seasons like Christmas and New Year. If you use your holiday property for both private and income-producing purposes, you can only claim a deduction for the period where it is income-producing. Partial year depreciation deductions may also apply to investors who have previously used the property as a primary place of residence. Be sure to speak to your quantity surveyor to ensure you claim correctly. BMT Tax Depreciation use legislative tools to make partial year claims more beneficial to new investment property owners. Methods used in pro-rata depreciation calculations include applying the immediate write-off rule and adding eligible assets to a low-value pool. Immediate write-off An immediate write-off applies to any item within an investment property with a value of less than $300, regardless of how long the property has been owned and rented. As an investor, you’re entitled to write-off the full amount of the asset in the first year. For example, if you purchase a new smoke alarm valued at $50 for your investment property, you can claim 100 per cent of the cost in the year of purchase. Low-value pooling Low-value pooling is a method of depreciating plant and equipment assets which have a value of less than $1,000. Any plant and equipment assets with a value of less than $1,000 can be included in a low-value pool and written off at an accelerated rate to maximise deductions. Item can be depreciated at 18.75 per cent in the first year and 37.5 per cent each year thereafter. This amount can be claimed in full in the relevant financial year regardless of how long the property was held for, even if it was one single day. Two types of depreciable assets can be allocated to a low-value pool: Low cost asset: a depreciable asset that has an opening value of less than $1,000 in the year of acquisition Low value asset: a depreciable asset that has an opening value of greater than $1,000 in the year of acquisition but the value after depreciating over time is now less than $1,000. This will only apply if you’ve previously used the diminishing value method. For example, if you purchase a hot water system worth $1,500 it can be depreciated using the diminishing value method. Once its depreciable value falls beneath $1,000, it will be added to the low value pool as it’s considered a low value asset. On the contrary, if the hot water system cost $900 at the time of purchase it would be automatically added to the pool as a low cost asset. It’s important to note that once an item is placed in a low-value pool, it cannot be taken out. Assets which form part of a group with a total cost exceeding $1,000 can cause confusion for property investors so it’s important to speak to an expert to clarify what can and cannot be claimed in a low-value pool. Talk to an expert To ensure all depreciation deductions are claimed correctly for the period a property is income producing or available for rent, investors should request a tax depreciation schedule. A BMT Tax Depreciation Schedule will outline all qualifying deductions from the date of settlement and include a partial year depreciation claim that is calculated pro-rata based on the time the property is rented.

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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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Best ways to advertise a rental property

BMT team — Wed, 16 Feb 2022 05:18:26 +0000

There are many reasons why you might need to advertise a rental property. Maybe the investment property is being advertised for the first time. Perhaps an existing tenant doesn’t want to renew the lease or has handed in a notice to terminate. Whatever the circumstances, your property professional will be able to walk you through the best advertising options available to you. When listing a property it’s best to have your ‘perfect’ tenant in mind. This will help your property professional work out how to reach them effectively to minimise the period of lost rental income. Here are some of the best ways to advertise a rental property in today’s market. Online listing portals Social media Newspapers Signs and flyers Online listing portals When Australians are looking to find a rental property, they generally head online. Online portals like Domain and realestate.com.au have a substantial audience reach, with millions of users accessing these portals nationwide. Your property professional will be able to guide you as to which listing portal is more common in your area and will reach a more suitable audience. Example, Allhomes is more common in the ACT than other sites. These portals are easy to understand and navigate. Social media Advertising rental properties on social media platforms like Facebook, is becoming more common. With the opportunity to use both free and paid advertising, social media can be cost effective. While it’s not necessary to use paid ads, there are many benefits to doing so. These include micro-targeting for specific audiences, reports and analytics, ad forecasting, performance estimates and more. For instance, your ‘perfect’ tenant is easier to target than ever with Facebook’s audience targeting software. Using filters that target specific demographics like age, location, interests and even online behaviours can track and target potential tenants to receive your rental property advertisements. If paid ads are not an option, posting rental properties on real estate agency or personal pages can still be an effective advertising option, reaching a targeted audience with key word and filtered searches. The Facebook Marketplace page is also an alternative. Newspapers Newspapers are another effective way to advertise rental properties. Online newspaper ads can include links to other websites with directory to further information and photos. This could be a real estate agency website or the original property listing. It is good to keep in mind that online newspapers generally have a younger average reader whereas printed newspapers generally reach an older audience. If advertising in a printed newspaper, listing rental properties on Saturdays and Sundays may be more effective as people read newspapers more often on weekends. These advertising slots may be more expensive than weekdays but will likely reach a larger audience. Signs and flyers Signage and flyers can be an effective way to advertise and generate interest for an investment property in surrounding streets and suburbs. They are an inexpensive way to broadcast in specific locations, providing receivers with property and contact information. This may be important if seeking a specific type of tenant or advertising in areas with similar community engagement or services. Hire flyer delivery services are available in most main cities in Australia for a relatively cheap price, with some packages starting at $130 per thousand flyers. It’s important to remember that rental advertising costs can be claimed at tax time. The advertising expenses can be claimed in the same year that they were incurred, reducing an investor’s taxable income and improving their cash flow. A vacant investment property can also present an opportunity for improvements to be made to the property, since tax deductible expenses can be claimed as long as it is genuinely available for rent. If planning to make improvements to an investment property, it’s best to reach out to a tax depreciation specialist like BMT. A BMT Tax Depreciation Schedule outlines every depreciation deduction claimable from the rental property. To learn more about depreciation contact BMT today on 1300 728 726 or Request a Quote.

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The pros and cons of allowing pets in rental properties

BMT team — Sun, 16 Jan 2022 21:38:41 +0000

As a landlord, one of the many considerations to make when looking for suitable tenants is whether to allow pets. About two-thirds of Australians own a pet, and while most states don’t have laws restricting tenants’ rights to own pets, many landlords include a clause in their leases that prohibit pets, which is within their legal rights to do. A major reason for landlords to include these clauses, is the perception that pets can devalue a home through damage to the property such as chewed up carpets, unpleasant odours and stains and moulting of fur. However, not all pet owners can be deemed irresponsible. Typically, pet owners will pay higher rents for the premium of having a pet friendly home, so will it work in your favour to consider adding ‘pet friendly’ to the lease? To help you decide, here are some pros and cons to consider before deciding if your property will be pet friendly or not: Pros of a pet friendly property You may be able to charge higher rent and thus achieve higher rental yields You will get a higher response from advertising if you mention that pets are allowed Due to this increased interest, your property may rent quicker and avoid vacancy periods where you are not earning rental income Pet owners generally stay longer as there is a limited number of pet friendly rentals available If tenants are mature enough to take good care of an animal, there is a good chance they will treat your property with the same respect If you are worried about pets damaging your investment property, you could ask for a refundable pet damage deposit Cons of a pet friendly property Individual pet owners might not be very good at cleaning up after their animals Pets can scratch floors, chew carpets and stain floor coverings, possibly leaving unpleasant odours Dogs barking, birds squawking and cats wandering can become a nuisance to neighbours through noise and damage There is increased liability to the Landlord if the pet bites or attacks others Making the decision whether to allow your property to be pet friendly or not should be taken into careful consideration to ensure that it feels right for you and your investment property. Check your insurance coverage and liability for animals If you decide to have a pet-friendly property, you should check your insurance policy to find out what type of coverage you have. Make sure you know the amount of liability coverage your policy includes. Enquire with your insurance company if there are any exclusions to your coverage, such as if they have a list of ‘dangerous’ dog breeds which will not be covered under the policy. Include your pet policy in your lease You should include a ‘pet clause’ in your lease and require each new tenant to sign it. This policy should clearly state your pet policy (whether or not you allow animals) and your expectations of the pet owner. Make it clear that by signing the lease, the tenant agrees to these terms and if they violate these terms, it will be considered a breach of contract. What is a pet resume? The introduction of pet resumes can make it easier for tenants to secure an animal-friendly rental property and helps Landlords protect their investment properties. Pet resumes are designed so animals can make a good impression. It also gives tenants a competitive advantage, proving they’re serious about the rental application and finding the perfect pet-friendly rental. Allowing pets in rentals could provide great advantages to Landlords. Don’t just write off pet owners in fear that your hard-earned investment is going to be destroyed. With most Australian households owning pets and with pet-friendly rentals in such short supply, the right changes to a lease agreement can open up the pool of potential tenants significantly.

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