» Property Managers

Why you need a site inspection for a tax depreciation schedule

BMT team — Wed, 15 Jun 2022 23:35:41 +0000

Most of us wouldn’t purchase a car before seeing it or exchange unconditional contracts for a property without a building and pest inspection. We believe the same applies to site inspections when preparing a tax depreciation schedule. Property depreciation can save you thousands, sometimes tens of thousands, each financial year. A tax depreciation schedule holds the key to unlocking this cash flow. Your schedule lasts the lifetime of the property, so it’s important to get it right from the very beginning. In this article we will explore: What is a depreciation site inspection and what does it involve Importance of noticing improvements during a site inspection Maximising claims while maintaining compliance Support from the industry Site inspections make it easier for you Key points A site inspection ensures your depreciation claims are maximised and are compliant Hard-to-find assets are always found during a site inspection Both the AIQS and NTAA support the requirement of site inspections. What is a depreciation site inspection and what does it involve? A site inspection for depreciation purposes is different to other inspections like building or open houses. To complete a site inspection, a specialist needs to enter the property to find all the items that can be depreciated. During the inspection, you will see them documenting the property’s items, taking measurements and photographs and analysing the workmanship. An inspection is especially important if your property was purchased second hand. The site inspector will make note of all plant and equipment assets in the property. Although some of these assets may be impacted by 2017 legislation changes, they can still be included in your capital loss statement. In some scenarios this can be an important component if or when you decide to sell the property or dispose of the assets. More importantly though, a trained specialist will identify additional works that will qualify for depreciation via renovations or additions completed sometime many years ago. Importance of noticing improvements during a site inspection Renovations and additions completed to a property over many years ago can be hard to find and are often missed by the untrained eye. For example, if your investment property originally had a gravel driveway and if anyone concreted the section where cars are parked, it may not seem like a qualifying addition, but that driveway will increase your claim. In this scenario, you wouldn’t be able to claim depreciation on the gravel as it is soft landscaping. But you can still claim capital works deductions on the newly concreted section for up to forty years. A specialist site inspector will identify any renovations completed by the previous owner. This means that if the original structure of the building is too old and ineligible for capital works deductions, you can still reap returns from any recent renovations completed in the last thirty plus years. Data shows that of all the schedules completed by BMT, 66 per cent have been for properties that have undergone some kind of renovation or addition. Maximising claims while maintaining compliance Knowing what to include in a tax depreciation schedule can seem straight forward. You look at the property and include what’s there, easy right? However, a specialist knows what to look for during a site inspection to ensure that your claim is maximised correctly. For example, a ducted air conditioner has division 40 and division 43 components. The ducting needs to be valued separately and added to the capital works deduction while under TR2021/3 the packaged unit is considered plant and equipment and depreciated using its unique effective life. Another example might be properly using immediate deductions that allow the owner to instantly deduct qualifying assets in the year of purchase. While knowing the cost of the asset may appear to be the only thing required to claim the deduction, this isn’t the case. An asset must meet four important steps to be eligible. Support from the industry The Australian Institute of Quantity Surveyors (AIQS) is the peak professional standards body for build environment cost professionals. The National Tax and Accountants’ Association (NTAA) is the representative voice for the tax community. Both the AIQS and NTAA support the requirement of site inspections. They know that when site inspections aren’t completed, deductions are missed, and costly errors are made. Some of the most common errors that happen is incorrectly claiming capital works deductions and misusing depreciation incentives such as the immediate deduction. When errors such as these are made, you can come under Australian Taxation Office scrutiny. Site inspections make it easier for you As a property investor, you are already juggling many things from work to tracking your cash flow to mapping out your future investment strategy. When a site inspection isn’t conducted, it means you must do a lot of the heavy lifting, from organising stacks of paperwork to providing the property’s structural information that you have never needed to think about before and not being a specialist yourself things will get missed. A site inspection takes the guess work out of preparing your schedule. BMT Tax Depreciation can make it even easier by organising the inspection directly with your property manager. BMT has been conducting site inspections on properties for over twenty years. A BMT Tax Depreciation Schedule has never failed an audit and is the preferred supplier to thousands of accountants across the country. To learn more about depreciation and how a site inspection can ensure you claim the most from your investment, Request a Quote or call BMT on 1300 728 726.

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Office renovation depreciation – case study and tax benefits

BMT team — Tue, 19 Apr 2022 06:54:06 +0000

With ‘working from home’ arrangements more commonplace since the start of the pandemic and social distancing now the norm, many businesses have recently altered their office layouts. Office renovation depreciation has always offered lucrative tax deductions. But since temporary tax depreciation incentives were introduced, office renovation has become even more attractive for the businesses that occupy them. In this post we discuss what’s happened in the office sector since the onset of the pandemic and look at an office renovation depreciation case study. Contents: Demand for office space since the pandemic Office renovation depreciation case study Demand for office space since the pandemic Since early 2020, companies have been faced with the incredible challenge of shifting their office-based employees to working from home arrangements, to adhere to state-mandated COVID-19 rules put in place to protect peoples’ health. Lockdowns and work from home orders lasted for months in some states, resulting in a great deal of office space going unused for prolonged periods. Many people held the expectation that more businesses would continue to employ either a full or hybrid working from home model, leading them to think that ongoing demand for office space would be lower than pre-pandemic. And while there was a sharp drop in demand initially, what is interesting is that demand for office space has rebounded, despite working from home arrangements still being in place for many businesses. Ken Morrison, Chief Executive of Property Council of Australia, said “While aggregate vacancy levels have risen slightly from 11.9 per cent to 12.1 per cent, the driver of this has been new supply of office space, not a drop in demand. The reality is that most CBD businesses continue to see the office as integral to their future, and that is reflected in the increased demand for office space over the past six months.” So, what is driving this demand? It appears that many businesses are not just growing in staff numbers but are needing more space to accommodate for social distancing measures, even in those businesses where employees work remotely for part of the week. While we can’t predict how long this will continue, we can rely upon the lucrative depreciation deductions available on office buildings and fit outs. Depreciation case study ‘Business A’ is a medium-sized business entity. It leases office space occupying a partial floor of a Sydney office tower. The space was originally fitted out in 2018 (prior to the COVID-19 pandemic) and is now going to be expanded to accommodate larger collaborative workspaces, social distancing and future growth in head count. The following table demonstrates the depreciation deductions available for the owner of the property (the landlord) and the business operating from it (Business A, the lessee). These deductions provide a healthy boost to cash flow for both Business A and the landlord. Note the large boost in deductions for Business A in year five, which takes into account the instant asset write-off for some of the new fit out. Some of the larger immediate deductions available to Business A from the Year 5 expansion include $60,000 for computer equipment, $33,000 for floor coverings and $14,000 for desks. Meanwhile, the landlord can continue to claim capital works deductions and plant and equipment depreciation on items such as air conditioning, lighting, switchboards and automatic doors. Tax depreciation schedules are key to claiming the maximum depreciation deductions. A BMT Tax Depreciation Schedule ensures commercial depreciation deductions are claimed to their full potential and compliantly by applying all industry-specific legislation. BMT also adopts current business incentives including the backing business investment and temporary full expensing depending on the business size, to ensure every cent is claimed. BMT Tax Depreciation has optimised its commercial process to ensure both owners and tenants claim the most deductions possible. To learn more about commercial depreciation of offices, call BMT today on 1300 728 726 or Request a Quote.

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How depreciation education can set you apart

BMT team — Sun, 08 Aug 2021 23:26:48 +0000

Juggling priorities and stiff opposition makes the property management industry one of the most competitive out there. Property professionals are constantly looking for ways to set themselves apart from the rest. One thing they shouldn’t discount to achieve this is educating landlords on what can make them more money from their investment property, especially big-ticket items like depreciation. What is depreciation? The physical element of a property depreciates in value, just like a new car does as soon as it leaves the dealership. Depreciation is the natural wear and tear of a property and asset over time. While most thigs depreciate, only owners of income-producing property (investors and businesses) can claim it as a tax deduction each financial year. How such a technical area can set you apart Depreciation mightn’t seem like a ‘flashy’ topic to sell to your landlords as it’s a very technical area of taxation legislation (and that’s what accountants are for, right?). But you can make a huge difference to your landlord’s cash flow by making them aware of this tax deduction. It’s different to any other they can claim as it’s a non-cash deduction, so they don’t need to be spend a cent to claim it. Wouldn’t landlords already know about depreciation? With over twenty years of experience, BMT has noticed some key facts among the property investor population. To name a few: Far too many don’t claim depreciation: The reasons people miss out on claiming thousands in depreciation deductions are many; they could simply be unaware of it, believe it’s unavailable to them or have fallen for the wrong advice. Those that do claim could still be missing out: Many investors are still failing to take advantage of the full potential of depreciation. This is usually because they use a ‘cheap and fast’ depreciation schedule that didn’t include a physical site inspection from a depreciation specialist. Some other reasons could be because they haven’t updated their schedule with recent improvements and renovations. Countless investors fall for the myths: There are a lot of depreciation myths out there, but you can make sure none of your clients fall for them. One key myth is that older properties don’t hold depreciation at all, but this is rarely the case. Others believe that second-hand properties don’t have depreciation deductions available (false) or that depreciation only available on a full financial year basis (also false). Start ensuring your clients make the most out of this lucrative deduction by obtaining an obligation-free depreciation estimate from BMT. This simple step can unveil thousands in deductions that your clients don’t know they are missing out on. Numbers prove the value of depreciation If your landlord clients aren’t sold on the idea that depreciation really makes a difference, prove your point with the numbers. The below data shows some deductions landlords can expect from an investment property and the difference depreciation alone makes to their tax savings. What do we provide to help you educate clients about tax depreciation? We provide a range of additional free services to assist property managers such as: Educational training sessions on depreciation either face to face or via webinar. In these sessions we cover a range of frequently asked questions and explain how claiming deductions will help your clients Speakers at your next event or investor night. We will provide an engaging and knowledgeable presentation on depreciation to explain the cash flow benefits directly to your clients Articles for newsletters and publications which explain depreciation in an easy to understand way Co-branded tools and brochures such as our tax depreciation calculator which provides a depreciation estimate for any property. We can also provide printed materials for your office. For more information about tax depreciation or any of the valued services we offer, visit our real estate professionals page or speak to one of our expert staff today on 1300 728 726.

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Sick of being the bearer of bad news? Here are a few ideas to turn the discussion around

BMT team — Wed, 17 Mar 2021 00:55:03 +0000

An out-of-the-blue phone call or email from you may have your landlord client expecting the worst. Questions like – what’s broken? What needs to be replaced? Could be the initial thoughts that cross their mind. But in these scenarios, how can you focus on the positives? Uncover the bright side of maintenance and repairs Let’s be realistic, repairs in an investment property are inevitable. But the way you frame the conversation can really soften the blow. It doesn’t need to be the end of the world if paint is peeling off, or the hot water system that just ran out of warranty needs a part fixed. This is because scenarios such as these are classed maintenance and repairs. So, how is this good news? It’s a positive because maintenance and repair costs are 100 per cent tax deductible in the year they are made. To make differentiating between maintenance and repairs easy, think of maintenance as something that prevents the repair, such as oiling a deck. Meanwhile, a repair can prevent needing to replace an entire asset, like fixing part of a rusted gutter but not the whole structure. It’s only when an asset is improved beyond its original state (i.e. replaced) that they may need to claim the cost back over time with depreciation. Explain the other expenses they can claim Repairs and maintenance aren’t the only expenses your landlord can claim in full each year. Tax is a certain part of life and you can show them how to pay less of it. Educating them on this aspect of owning an investment property can quite literally put money back in their pocket. They key yearly tax deductions they can claim include: Loan interest Depreciation Insurances Repairs and maintenance Rates Land tax Water charges Advertising for tenants Body corporate fees and charges Gardening and lawn mowing Book keeping fees Pest control Property management fees You can also point them in the right direction for when it comes to tracking these expenses to provide to their accountant. It doesn’t need to be a time-consuming process if they use MyBMT. This free tool stores all their expenses and receipts and can be directly linked to their accountants MyBMT profile. Have the depreciation discussion Imagine getting a call from someone saying you can claim an average of almost $10,000 in your next tax return, without spending a dollar? It would sound too good to be true, right? Well, you could legitimately be this person for your landlord. New to Rent is a free tool that automatically generates depreciation estimates for any property on your rent roll. Even if your landlord is already claiming depreciation, we still find that many aren’t taking full advantage of it. So giving them a call to discuss depreciation and point them in our direction can make a world of difference to their cash flow. We are here to partner with you to help your landlords claim more in depreciation deductions, while helping you boost your competitive edge. Our team are available every business day to answer any questions you may have about all-things depreciation. You can contact us on 1300 728 726 or visit our website.

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Key steps to onboarding your landlords while enhancing your first-class reputation

BMT team — Wed, 17 Mar 2021 00:51:47 +0000

As a property manager, you juggle moving parts like a pro. Your time management skills are second-to-none and relationship building is your forte. You already have a comprehensive onboarding checklist, which covers the essentials like gathering the relevant documentation, the legalities and financials. But looking beyond this checklist is what will keep the property management and onboarding process simple for your new landlord client and in turn, give you back more time. Making it easy is a priority Your new landlord could be a first-time investor. Or they could be an avid property investor with many properties who has decided to switch property managers. Whatever the case, it’s important to showcase why you’re different from the very beginning and what you’re there for. A first-time investor might not understand the extent of what you look after, for example a repair and maintenance request for the property would be daunting for them but you can explain that you will organise everything while keeping them informed. Showing them how you make owning an investment property easy will build their loyalty to you as their property manager. Establish a suitable ‘tenant profile’ With the rental market competition surging in some areas, the number and vast array of prospective tenants that apply for a single property can understandably be overwhelming. As a property manager you will provide a short-list of candidates for the landlord to select the best suited tenant. While the fundamentals are always considered like the tenant’s employment status, income and rental history, additional criteria can also help narrow this list down. So, when onboarding your new landlord client, work with them to find a realistic, ‘ideal’ tenant profile. Factors could include: Whether pets are allowed How long a tenant’s rental history should be Whether a character reference is a deal breaker The tenant’s motivation to move, which may affect how long they stay Whether the landlord prefers a short, or long-term tenant The schedule of future rental increases or reviews The landlord’s preferences to all these points can help the tenant screening process. Accountabilities Lay out the foundations early and outline the responsibilities of all the parties involved. This is going to help you in the long run and avoid any miscommunication in the future. During the onboarding process, ensure all parties understand who is accountable for what and the timeframe around when information should be shared, or approvals made. Part of this discussion could be the fair expectations of the tenant. Is the tenant expected to look after the lawns or pool maintenance, and if so, how frequently and to what level? Have the depreciation discussion early Thousands of investors are still missing out on claiming depreciation, or not making the most of it. When onboarding your new landlord, include a depreciation discussion as part of the process to help them boost their cash flow. Depreciation is the natural wear and tear of a property and its assets over time. It’s a non-cash deduction, so your landlord doesn’t need to spend any money in order to claim it. The proof is in the numbers and you can show your landlords the benefits of depreciation with New to Rent. This complimentary service provides free depreciation estimates to your properties once they’ve been listed online, so you’ve got the estimate early on in the piece to show your landlord. Start adding value to your existing service by signing up to New to Rent today. If you would like any additional information on the platform, contact the BMT team on 1300 728 726.

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Resi Rates helps landlords and property managers resolve disputes

BMT team — Tue, 07 Jul 2020 01:30:51 +0000

BMT Tax Depreciation’s app, BMT Resi Rates, helps property managers and landlords find out the effective life and depreciation rate of any plant and equipment asset within a residential property. Plant and equipment assets are easily removable or mechanical fixtures and fittings. Each plant and equipment asset has its own rate of depreciation and effective life. These include items such as carpet, hot water systems, air-conditioners, blinds and even less obvious items such as garbage bins, exhaust fans and door closers. The BMT Resi Rates app assists property managers to search and find the effective life and depreciation rate for any of the depreciable fixtures and fittings a residential investment property is likely to contain. This helps resolve disputes over damaged assets and maintenance or replacement scheduling. Let’s look at an example of how Resi Rates helped a property manager resolve a dispute between a landlord and their tenant. A property manager conducted an exit inspection on their client’s rental property. Unfortunately, they found that the carpet had been substantially damaged and required full replacement. A dispute arose between the tenant and landlord over whether the cost of the damage should be covered by the tenant and if so, how much should they be required to pay. The property manager did a search on Resi Rates to find out the effective life of the carpet. From this search, they found that the carpet in a residential property has an effective life of eight years, that depreciates at a rate of 12.5 per cent using the prime cost method. The owner had paid $4,000 for the new carpet six years ago. From this information, the property manager was able to calculate that based on the eight year effective life of carpet, there was still 25 per cent of the value left at the time the carpet needed replacing, which was $1,000. The information gathered from Resi Rates allowed the property manager to form a strong case, deeming the tenants responsible for paying the remaining $1,000 as damages. Download the free BMT Resi Rates app for either iPhone, iPad or Android devices. Property managers can also visit Rate Finder online to search for the depreciation rate and effective life of any plant and equipment asset from their desktop computer. For more information on depreciation and other services offered by BMT, contact the team on 1300 728 726 or Request a Quote.

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5 key features of MyBMT

BMT team — Tue, 16 Apr 2019 01:33:11 +0000

Have you considered registering for MyBMT but wondered what features you will receive? MyBMT is a smart, complimentary service from BMT Tax Depreciation. This interactive portal helps property investors, Accountants and Property Managers to manage their investment property and depreciation details and is a great place to do research if buying a property, whether for investment or personal use. It takes only seconds to register for on-the-go access to existing depreciation quotes, ordering a new schedule or requesting an estimate. We take a look at five key features. MyBMT is simple to use MyBMT’s easy-to-use interface makes managing depreciation for an investment property a cinch. Property investors can view, update and download depreciation schedules. MyBMT also makes it simple to calculate the cash flow required to hold a property, estimate depreciation deductions, replacement costs and more. Accountants can Request a Quote on behalf of their clients, see how clients’ schedules are progressing and make updates as well as download schedules in CSV or Excel format for their Accounting software. Property Managers also benefit from MyBMT and can view free depreciation estimates for their listed properties via MyBMT’s value adding tool, New to Rent. They can also, request quotes and updates to their clients’ schedules.. Consolidate all property documentation Upload and keep all investment property documentation in the one, convenient place – like individual property files, photos and receipts. Take advantage of how easy it is to view, update or share depreciation schedules with your personal investment team. Research & Insights Our research and insights tab helps investors to learn more about the area in which a potential investment property is located. View market data, see nearby planning applications and generate a valuation for any property with an existing depreciation schedule. This feature allows investors to discover newly listed properties in their area as well as important metrics such as recent census data, information that can assist the decision of whether to take on an investment property. PropCalc PropCalc is the essential property cash flow calculator for anyone looking to buy property. It uses data such as income, stamp duty, deposit amount, expenses, rental income and tax depreciation figures to provide an accurate after-tax cash flow required to own a property. PropCalc is the essential tool for investors looking to buy an investment property. It comprehensively calculates the costs associated with holding an investment property and thereby assists investors to determine whether a property is right for them. BMT Insurance BMT Insurance works with some of Australia’s most experienced providers to select the most suitable and cost effective insurance for you. As brokers, we have access to a range of policies to suit your situation. With features and inclusions appropriate to landlords, we are sure to have a comprehensive policy to meet your needs. BMT Insurance offers a wide range of insurance options to suit your needs such as building, contents and landlord insurance. Why not register today? It’s free and offers on-the-go access anytime, anywhere. If you would like to have BMT Tax Depreciation, the tax depreciation specialists, as a part of your property investment team, contact us today on 1300 728 726.

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Could your client be smiling too?

BMT team — Fri, 29 May 2015 06:00:31 +0000

Imagine how one of your investor clients would react if you could tell them how to receive $3,536 in extra cash flow with little to no effort. With property depreciation this is no longer just an idle fantasy. Amy’s Property Manager found this out herself when she recommended her client contact BMT Tax Depreciation to find out what depreciation deductions were available for her investment property. Amy purchased a nine year old three bedroom house in an outer suburb of Sydney for $610,000 just over one year ago. Prior to making her depreciation claim Amy’s investment property was earning a rental income of $495 per week with a total income of $25,740 per annum, while her yearly expenses totalled $41,028. Towards the end of her first year owning the property Amy’s annual after tax outlay amounted to $9,631 or $185 per week. Amy mentioned to her Property Manager that she was concerned about her cash flow. That’s when her Property Manager suggested she speak with BMT Tax Depreciation to find out what depreciation deductions she could claim for the building structure and the plant and equipment assets contained within the property. BMT Tax Depreciation was able to complete a thorough site inspection and provided a detailed tax depreciation schedule showing the deductions available for her property for the next forty years, including $9,585 in the first year. The following table provides a summary of Amy’s scenario, both before and after depreciation was claimed. A BMT Tax Depreciation schedule reduced Amy’s annual outlay for the property to $6,085 per annum or $117 per week, a difference of $68 per week or $3,536 per year. “By claiming depreciation, I was able to significantly reduce the amount of tax paid on my investment property. I can’t thank my Property Manager enough for recommending BMT Tax Depreciation to me,” Amy said. Recommend an expert With just a few words you have the power to completely transform your investor clients’ cash flow situation. BMT also offer a range of additional services and information to help Property Managers add value to their existing service such as face to face or webinar training sessions for your staff and clients, educational brochures and material that you can send on to your clients. Order now: Order educational material for your office today If you feel you have a client who we can make smile, please do not hesitate to contact one of our friendly staff on 1300 728 726, or request a quote today.

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How tax depreciation can assist with winning property managements

Bradley Beer — Thu, 13 Nov 2014 06:02:21 +0000

Your chances of winning over those ever important property managements can be increased by improving your knowledge on tax depreciation. Ensuring your clients are aware of the benefits of depreciation can help you to negotiate and secure a listing. As a Property Manager you need a large knowledge base to effectively manage a property portfolio. Being able to pass on relevant information to your clients on their investment properties demonstrates your ability to add further value to your services. Improving your knowledge on tax depreciation will provide you with a clear advantage over your competition, rather than if you were to solely focus on the functions your clients might typically expect from a Property Manager. Amanda, a Principal and Licensee from NSW with around 700 rental properties under management, also believes that educating landlords on the most effective ways to maximise their investment is crucial for generating trust and bringing negotiations over the line. “By discussing ways to maximise cash flows from the property other than just helping them achieve the best rent, such as by using depreciation schedules, you can create customers for life from the savings they receive.” “It can also make you look like a much more professional and well-rounded outfit, and shows you care about ensuring your clients receive the best possible financial outcome.” said Amanda. Amanda was recently able to secure eleven new managements from a single investor because he was impressed by her approach to educating him and sharing her knowledge on the whole process of property investing. Amanda was competing against every other agency in her area for these managements, however due to her ability to demonstrate a greater degree of knowledge on tax depreciation she ensured the customer selected her firm over her competitors. Earlier research conducted by BMT has uncovered that as many as eight out of ten property owners are not claiming full depreciation deductions where they are eligible to do so. There are a large number of property investors that are unaware of the depreciation deductions they are missing out on. This is a great opportunity for property professionals to show their clients the extra funds that they can gain from investing in a depreciation schedule.

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Kirsty Spraggon – building your network ARPM 2014

BMT team — Tue, 12 Aug 2014 00:06:58 +0000

We were fortunate enough to attend the Australasian Residential Property Management (ARPM) conference 2014 on the weekend and got to listen to some very talented speakers. One speaker that caught our attention was Kirsty Spraggon. Kirsty is a very successful international speaker, author and entrepreneur with an outstanding career that saw her ranked in the top 1 percent of individuals in RE/MAX’s global network of 121,000 sales agents worldwide. Learn more about Kirsty and visit her website today www.kirstyspraggon.com.au Kirsty spoke on the subject of building your network. Below are some takeaway pointers from the talk, which we’re sure you will find very useful when building your network. Building your network Be there: Be present Be listening Be energised Care: Be memorable Pay a genuine compliment Care enough to connect Pay attention Share (no-one cares what you do until they know who you are): Share an experience Share some advice Share a part of yourself The images below are courtesy of ARPM

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