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What if Santa’s workshop was an investment property?

BMT team — Thu, 20 Dec 2018 21:31:53 +0000

Santa’s workshop has the power at Christmas time to capture our imaginations and cast them to the snowy North Pole, where our minds bear witness to the source of the joyful magic of the holiday season. Whilst the big, jolly, red guy is making his list and checking it twice, his playful elves are helping to build, test and wrap all those special toys and games in time for Santa to deliver around the world on Christmas Eve. One such clever elf in Santa’s service, is Brad, the BMT Christmas elf. Brad the elf pointed out to Santa the tax depreciation deductions claimable in his toy making workshop. By claiming depreciation at tax time Santa discovered just how easily he could increase his cash flow. It was as simple as jumping online and requesting a quote from the BMT Tax Depreciation website. After a visit to the North Pole by a BMT depreciation expert, Santa learnt that he is indeed eligible to claim all the wood working machinery and hand tools plus his work bench. He can also claim the light fittings and the ducted gas heating which is essential in the freezing, wintery climate of the North Pole. Santa was surprised to learn that the structure of the Christmas toy workshop was also claimable as a capital works deduction. As the example below shows, Santa could claim $17,366 in the first full financial year’s depreciation deductions. Santa only needs to get a depreciation schedule produced once as it lasts 40 years and will outline the depreciation deductions for the lifetime of his workshop. The cost of the report itself is also 100 per cent tax deductible. Like Santa, if you have not previously claimed depreciation, your accountant may be able to backdate your claim for the previous two years, so you can recoup some additional cash back on previous years’ tax returns. With more than twenty years of experience, BMT Tax Depreciation’s specialist staff conduct physical property inspections to ensure that all claimable assets are included in each tax depreciation schedule. Contact the expert team at BMT on 1300 728 726. BMT would like to take this opportunity to wish everyone a very Merry Christmas and a safe holiday season.

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Merry Christmas from BMT

BMT team — Wed, 20 Dec 2017 04:21:55 +0000

It’s that time of year when most of you will be coming together with your family and close friends to celebrate the year that has gone by and think about the accomplishments you have achieved. 2017 has been an incredible year for the team at BMT Tax Depreciation. We’ve made some exciting new developments, such as the launch of our online portal MyBMT giving investors, Accountants and Property Managers access to a variety of valuable tools. It has also been a year of change for the property market. Some investors have started to feel the effects of measures implemented by the Australian Prudential Regulation Authority (APRA) over recent years. However, continued record-low interest rates have meant there are still plenty of opportunities to purchase an investment property. In addition to this, alternative trends such as rentvesting continue to be a popular way to enter the market. 2017 also held a landmark change to the legislation surrounding property depreciation, with the Treasury Laws Amendment (Housing Tax Integrity) Bill passed by Parliament on the 15th of November. The new legislation applies to the way plant and equipment assets are claimed by property investors. Those who exchange contracts on a second-hand residential property after 7:30pm on the 9th of May 2017 are now unable to claim depreciation for previously used plant and equipment assets. It is important to acknowledge that not all investors are affected by these changes. The rules have been grandfathered, which means those who exchanged contracts prior to 7:30pm on the 9th of May 2017 can still claim depreciation as normal. Capital works deductions for the structural component of a property, which typically make up between 85 to 90 per cent of the total construction cost and therefore the total claimable amount, are unaffected and can continue to be claimed. Investors who purchase a brand new residential investment, including substantially renovated properties, and commercial property owners and their tenants are also unaffected by the new legislation. As the New Year approaches it will be more important than ever for investors to do their research, to budget and plan for the future. An essential part of this process continues to be obtaining a comprehensive tax depreciation schedule from a specialist Quantity Surveyor. Each and every BMT Tax Depreciation Schedule we provide will be tailored to suit an individual’s property investment scenario, ensuring that all deductions are maximised in line with the new legislation. Although there has been a lot of change it has still been a great year for BMT, delivering thousands of depreciation schedules across Australia. This would not have been possible without your support. We thank you all and look forward to working with you next year. From all the team at BMT we wish you a safe and Merry Christmas and a prosperous New Year.

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Get your investment property in order for summer

BMT team — Mon, 18 Dec 2017 01:34:33 +0000

With Christmas just around the corner and the warmer weather already here, now’s the ideal time to make sure things are in order at your investment property before the Christmas and New Year break. Here are a few suggestions. Prepare the pool With the weather quickly heating up and some time off work to relax, tenants living in a property with a pool will be making good use of it now more than any other time of year. If you’re responsible for the cleaning and maintenance of the pool (as some landlords are, as per their rental agreement) make sure this has been done in time so it’s ready to go for the Christmas break. You should also check that all safety obligations are being met. This includes everything from correct fencing to adequate signage. If there is any damage around the pool area you need to fix (loose tiles or a broken shade sail for example), now’s the time to do it if you haven’t already done so. Be fire smart and check fire alarms Ensure your investment property is prepared for bush fire season, particularly if it’s in an area prone to fires. Ensure all smoke alarms are fully functional and that any fire safety equipment – such as a fire extinguisher – is in good working order and in date. Security alarms and locks With people heading away on holidays or to visit family at Christmas, home security is vital at this time of year. You’ll want to make sure that the locks on all windows and doors are working properly, that security screens are intact and any security alarm systems are operational. General maintenance and repairs If you’ve been putting off any repairs or regular maintenance, or your tenant has recently asked you to fix something at the property, do it now. It’ll be easier than getting a tradesperson in over Christmas. This could be anything from fixing insect screens that have holes in them, repairing that faulty oven or mowing the lawn (should that be your responsibility). It’s fair to say your tenant won’t be happy if they don’t have a working oven to cook their Christmas Day roast in! Avoid having unhappy tenants by getting on top of repairs and maintenance before Christmas. Air conditioning The air conditioner is going to be in high demand over the coming weeks. Arrange for cleaning or repairs if needed to make sure the AC is fully operational for the summer. Check on rental payments Keep in mind that with several public holidays over Christmas and New Year, the processing of rental payments may be delayed by a day or two in some cases. This is a common time for payments to be delayed, often at no deliberate fault of the tenant. Be aware of this, should you depend on your rental money as soon as it comes in, and make other arrangements if this will delay any of your own payments. It is also likely that your property manager’s office or agency will be shut down over Christmas or at least on the public holidays, so it’s best to get in with any queries or questions before then. With the peace of mind that all these jobs have been sorted you can kick back, relax and actually enjoy the break, as can your tenants.

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Tis the season for sharing

BMT team — Fri, 23 Dec 2016 00:11:29 +0000

Given that median house and unit prices have continued to rise in some areas of the property market during 2016 and in Sydney and Melbourne in particular, it’s no surprise to learn that more investors are choosing to take advantage of co-ownership. Recent figures from Mortgage Choice show an increase in first home owners co-buying with friends and family, up from 7.9 per cent to 9.2 per cent. Investors too are also taking advantage of the benefits which co-ownership can provide them, such as increasing their buying power by combining their income and savings, improving borrowing capacity and reducing the burden of the corresponding expenses involved in holding the property. Given it is the season for sharing, we thought we would provide details about how co-ownership will not only make it easier to invest in property, but also explain how this can affect the depreciation deductions investors can claim. To ensure that depreciation claims are correct and maximised, investment property owners are encouraged to speak with a specialist Quantity Surveyor to request a tax depreciation schedule for their property. If a property has more than one owner, it is recommended to select a depreciation schedule provider, such as BMT Tax Depreciation, who outline deductions based on each owner’s percentage of ownership in each individual asset. By splitting an assets value by ownership percentage first, each investor potentially will qualify for higher depreciation deductions. Split schedules enable co-owners to increase deductions for plant and equipment items earlier in their effective lives using depreciation methods such a low-value pooling and immediate write-off. Let’s take a look at each of these methods and explain how these should be calculated for assets which are found within a property with a 50:50 ownership split. Low-value pooling Low-value pooling is a method of depreciation which allows an investor with an ownership interest in an asset of less than $1,000 in value to claim deductions at an accelerated rate of 18.75 per cent in the year of purchase and 37.5 per cent each year afterwards. As each investor’s ownership interest may qualify for the low-value pool, co-ownership expands the number of items that can be claimed at this higher rate of depreciation. For example, in a 50:50 ownership situation, items valued less than $2,000 can be written off immediately. Immediate write-off Legislation allows property investor’s to claim an immediate write-off for assets with an opening value of $300 or less. In a situation where ownership is split between one or more parties, the rule allows investors to claim an immediate write-off to items where an owner’s interest in the asset is less than $300. For example, in a 50:50 split scenario, items valued less than $600 can be written off immediately. Example scenario Below is an example of the difference obtaining a split depreciation schedule will make for two investors who co-buy an investment property with a 50:50 split. As you can see, in the first financial year alone the owners can claim an additional $492 by requesting a depreciation schedule with a 50:50 split. Over five years of cumulative claims, the total difference for the owners in their deductions using the split schedule is $2,099. The increase in depreciation deductions helps owners to greater improve their tax returns and therefore their cash flow. Whether you’re an investor with just one property, an investor who purchases an investment property with your partner in a 50:50 split, or even if it is for four owners who choose to split deductions at 70:15:10:5, a comprehensive depreciation schedule which is tailored for the investors needs and considers the property owners circumstances will provide additional cash flow. This extra money really can come in handy to help with holding costs throughout the year, or even be beneficial for the owner at Christmas time, when any savings may just help you and your family to share some of the festivity around your Christmas tree.

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What you will find in homes around the world at Christmas

BMT team — Fri, 09 Dec 2016 03:16:41 +0000

At BMT we’re fascinated by property and homes, and this doesn’t stop at Christmas time. Considering Christmas is traditionally a time for families with many gatherings taking place in the family home, properties are often central to Christmas celebrations worldwide. In Australia it’s not uncommon to deck our houses out with fairy lights, decorate the interior and have the family around for a huge lunch on Christmas Day. But what else do people do in their homes at Christmas? To get into the festive spirit, we wanted to take a look at some of the more quirky and fun things you might find in properties around the world at Christmas time. Here are five of our favourite property related Christmas traditions. Norway – porridge and broomsticks In Norwegian folk law, small gnomes known as ‘Nisse’ are said to protect a home’s farm and its animals. It is therefore tradition on Christmas Eve to leave a bowl of porridge in the barn for the Nisse, so it continues to protect the farm in the new year. Inside the house on Christmas Eve, Norwegians will hide all their brooms away, as legend has it that evil witches will come and steal them on this night if there are any left out. Guatemala – burning the evil out of houses Guatemalans probably have the cleanest houses out of everyone come Christmas time, as their tradition is to carry out a full house clean in December. In lots of neighbourhoods, the dirt, dust and unwanted belongings from each house are collected and put into a large, communal pile. A devil statue is placed on top of this pile and the whole thing is burnt, as they believe bad omens and spirits will be burnt away with the devil. This is known as Quema del Diablo (burning of the devil) and takes place on the 7th of December each year. Guatemalans do this to eliminate any bad spirits from their homes, ready for a prosperous start to the New Year. Bulgaria – where carols are sung to houses On Christmas Eve in this eastern European nation you will find Koledari (carol singers) doing the rounds singing their carols, but not just to people – to their houses too! Traditionally starting after midnight, they will sing a special house song when they reach a residence, to praise the house, wish it well and rid it of any evil spirits. Having the Koeldari visit your house is said to be incredibly good luck. The head of the house will then give the carollers food as thanks. Greenland – shining stars and rotting carcasses If one country is going to get into the Christmas spirit, you can be sure it’s those in Santa’s rumoured home country, Greenland. Because it is so far north in the Arctic Circle, Greenland gets very little light in the festive period and over winter in general. As such, locals traditionally put illuminated stars in the windows of their houses and public buildings to bring some light to an otherwise very dark place. It’s also tradition on Christmas Eve for men to serve the women of the house food and coffee. Such treats you will find in people’s homes at Christmas include the delicacy ‘Kiviak’, which is an auk’s raw flesh that has been buried in a seal skin for months until it has decomposed. And here we were thinking Santa enjoyed cookies and milk! Switzerland – advent calendar houses During the advent period, some Swiss villages turn their homes into real life advent calendars, with the houses that are part of the advent calendar decorating a special advent window. When it’s your house’s particular day of advent, you hold a party for all the villagers that evening, complete with food, mulled wine and music. For those of you spending Christmas in your holiday home, don’t forget that these types of investment properties can bring you Christmas gifts in the form of depreciation deductions. Learn more here.

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Celebrate Christmas and remember your tenants will too

BMT team — Wed, 23 Dec 2015 22:21:31 +0000

It’s that time of year when families gather around the dining table to dig into a Christmas roast, peel some fresh prawns to dip in some thousand island dressing or indulge in a sizzling barbeque in the backyard. While an investment property is likely to be far from the minds of most investors at this time of year, it is still a good time to think about how many of the items you’re using to make this Christmas a safe and memorable one are also being used by your tenants in a similar fashion. To get into the festive spirit, we wanted take a look at some of the depreciable assets used at Christmas time and why they are not only important to helping your tenants enjoy some seasonal down time, but also to helping investors improve their cash flow all year long. Air conditioners An Australian Christmas will often mean one thing – hot weather. Like their landlords, tenants will want to stay cool over the holidays. Most properties are equipped with either split or ducted air conditioning that can chill an Australian heat wave down to a few levels short of becoming a white Christmas. These assets can also enable the owner to claim substantial deductions. If an owner is planning on installing or even replacing an air conditioner in their investment property, they should be aware that split system and ducted air conditioners each depreciate over a different effective life and depreciation rate. Split system air-conditioners have an effective life of ten years and diminishing value rate of 20 per cent, while ducted air conditioning units will depreciate over fifteen years at a rate of 13.33 per cent. While ducted is obviously more expensive to install, if an investor were to only spend $5,000 on cooling, it is the split system air conditioner which would earn them the greatest depreciation deductions in the first financial year. At a cost of $5,000 an investor can claim $1,000 in deductions on a split system and for a ducted air conditioning unit for the same price they could claim just $667. Ovens All those ovens around the country which are carefully roasting Christmas hams are also deductible assets for investment property owners. Using the diminishing value method, an oven worth $1,019 will result in $170 worth in deductions in the first financial year for the owner. Be mindful that these items also need careful attention. Next time you’re whipping out the gloves and oven cleaner think about when the last time your Property Manager performed an inspection and may have checked the oven. For Property Managers, the oven often gets overlooked during regular inspections and it can be particularly hard for tenants to keep it clean if they plan on vacating the property later if it has not been done on a regular basis. Consider whether getting a professional oven cleaner in is an option, there are a number of providers who can do so and any maintenance costs involved in doing so are also a deductible expense for the owner of the property. As ovens have an effective life of just twelve years, if the asset is getting on the older side, it could also be time for a much needed update. Barbeques Barbeques are also an asset which often gets forgotten and may only be used seasonally by tenants. Although not as often found in rental properties, freestanding barbeques which may get exposed to the elements wear out quickly, with an effective life of just five years. Consider getting a freestanding outdoor garden shed to keep it out of the weather between use. Using the diminishing value method – a freestanding barbeque which set an investor back $4,500 would result in $1,478 in deductions. If a barbeque is a fixed asset, remember that structural items are claimed as capital works deductions, meaning the structure of the barbeque itself will be claimed at a rate of just 2.5 per cent per year. The sliding trays and cookers within the barbeque can be claimed however at a diminishing value rate of 20 per cent over an effective life of ten years. Building that freestanding outdoor garden shed might cost $855 but its well worth protecting those garden assets when you consider this will result in $160 in deductions in the first financial year also. Security devices While Christmas is mostly about sharing and happiness, unfortunately the season can also bring the unwanted attention of thieves. If you haven’t already, it is worth thinking about installing a security device into both your home and your investment property to keep things safe and sound. A full closed circuit television system so tenants can keep an eye on their property whether they are at home or even away during the holidays could cost the owner of the investment property $1.550 but also result in $775 worth in deductions in the first financial year. Smoke alarms In most states across Australia, smoke alarms must be fitted and comply with standards set by the Building Code of Australia. Most homes will have two devices which should be tested regularly. Landlords should give tenants notice before they come to fit or update existing smoke alarm systems and be particularly considerate if you are planning on doing so around the holidays. These little devices which no doubt will emit beeps to let you know if that Christmas turkey is over baked are also deductible for the owner. As they should cost under $300, the owner can claim these items as an immediate deduction. Smoke alarms costing around $145 for example will see the owner receive this same cost as a deduction in the first financial year after installation. Swimming pool assets While the kids are creating waves by bombing the deep end of the pool over the break, remember the pool of an investment property needs particular attention all year around. Chlorinators and filtration assets all wear out so once a year think about checking these devices […]

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