» depreciation deductions

Holiday parks generate lucrative depreciation deductions

BMT team — Thu, 08 Dec 2022 04:03:22 +0000

Domestic travel is growing. Comparing the June 2022 quarter to the June 2019 quarter, there was an increase in domestic holiday spending of 60 per cent or $5.2 billion, the biggest increase since before the pandemic. Domestic travel is forecast to return to around its pre-pandemic level in 2022-23, then surpass that previous peak in 2023-24. Part of this growth is holiday park stays. According to figures from accounting firm BDO Australia and the Caravan Industry Association, holiday and caravan park revenue has increased twenty per cent above pre-pandemic levels in the first five months of 2022. Holiday parks are a popular domestic destination for millions of Australians thanks to their variability. With domestic travel picking up, now is the time for holiday park operators to ensure they’re claiming maximised depreciation deductions. Here, we demonstrate what depreciation deductions look like in a holiday park and how applying government incentives can further boost cash flow. Government incentives The Australian Government introduced various temporary incentives and policies to boost economic growth and support businesses throughout the COVID-19 pandemic. These incentives include temporary full expensing, increased asset write-off and backing business investment. One of the most significant was temporary full expensing where eligible businesses can claim an immediate deduction for the business portion of the cost of an asset in the year it is first used or installed ready to use for a taxable purpose. Find more information on the available incentives here. Depreciation deductions in a holiday park Holiday parks attract domestic travellers due to their wide range of facilities and flexibility. They’re family friendly, many are pet friendly, and there are a variety of pricing and accommodation options to suit all budgets. They’re also typically found in stunning locations with offsite attractions close by. All types of holiday parks hold lucrative depreciation deductions in both capital works deductions (Division 43) and plant and equipment depreciation (Division 40). Some commonly found claimable capital works deductions in holiday parks include reception buildings, playgrounds, BBQ shelters, picnic tables, swimming pools, cabins and amenity blocks. Commonly found depreciable plant and equipment items include power units for powered sites, air conditioning units, furniture, blinds, linen, towels, jumping pillows and swimming pool filtration systems. The case study below demonstrates what depreciation deductions look like in a holiday park. Hypothetical case study: Shell Holiday Park ‘Shell Holiday Park’ is located on the South Coast of New South Wales and has a wide range of onsite facilities including cabins, powered and un-powered camping and caravan sites, a large swimming pool, playground, water playground, a modern shower and bathroom block, laundry, BBQ’s, picnic areas and a recreation room. In 2021 Shell Holiday Park was purchased by new owners who completed renovations and upgrades in the same year. The table below demonstrates the depreciation deductions found in Shell Holiday Park. Please note this table does not display every division 40 asset calculated in the total and some have been grouped together. The owners of Shell Holiday Park claimed a total of $10,950,809 in depreciation deductions across the first five years in both divisions, throughout the life of the property they will boost cash flow ever further. Because the owners applied temporary full expensing on the upgrades completed in 2021, they were able to claim the qualifying plant and equipment assets as an immediate deduction resulting in a high first-year depreciation claim. By applying temporary full expensing, the owners of Shell Holiday Park were able to use the improved cash flow to build a kids swimming pool, update cabin furniture expand the picnic facilities for the next season. To claim maximised depreciation deductions, holiday park operators should get in contact with a specialist quantity surveyor to organise a tax depreciation schedule. BMT Tax Depreciation has been specialising in commercial depreciation for over twenty years. The team applies industry-specific legislation to ensure all commercial property owners and tenants claim depreciation to its full potential, while maintaining full Australian Taxation Office compliance. To find out more about how holiday park owners and lessees can claim maximised depreciation deductions call BMT on 1300 728 726 or Request a Quote. Disclaimer: the case study used within this article is hypothetical and based on a specific business entity, location and size, this information should not be used as a quote.

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Discover the tax benefits available to granny flats owners

BMT team — Mon, 26 Sep 2022 02:18:41 +0000

For many years granny flats have been an increasingly popular way to invest in property. Granny flats can boost a property’s value substantially and increase rental yields. Granny flats (also known as secondary dwellings) are self-contained units that have a kitchen or kitchenette, bathroom, bedrooms, a laundry and living area. They’re popular for older family who require ongoing support, as Airbnb’s (more so if the location is in a tourist area), and for people simply wanting to boost their cash flow. Some people are even moving into their granny flat and renting out their main home to maximise earning potential. In this article we explore the benefits of granny flats, each state’s regulations and how depreciation deductions can maximise an investment return. Tax benefits of a granny flat State regulations Maximise investment return with depreciation Tax benefits of a granny flat There are many benefits to granny flats including earning a rental income, quick returns, access to tax benefits, growth in property value, and space for family growth. The cost of constructing a granny flat is cheaper and can yield quicker returns than alternative residential investment properties such as a house or an apartment. The price of constructing a granny flat can be anywhere from $80 000 up to $300 000 plus and construction is usually scheduled between twelve to fourteen weeks from start to final handover. Prices depend on size, fixtures and fittings, the land it’s built on (for example if the land is on a slope construction may cost more) and existing services (if the granny flat is further away from your power and sewerage system it may cost more to connect them). This doesn’t include council or application fees. Some councils require fees and contributions be paid before building which go toward the additional services and infrastructure required as a result of a development. Because a granny flat is income producing there are a variety of tax benefits available including depreciation] and claiming costs such as rates, insurance, interest rates, repairs and maintenance. A typical granny flat can produce a rental income of anywhere from $250 -$500 a week depending on location, size and level of finish. Renting out a granny flat doesn’t only improve cash flow but allows owners to pay off their mortgage quicker. It’s important to note that while there are many benefits to granny flats it doesn’t guarantee the house will grow in value and can potentially reduce the buyer pool when selling as some people don’t want a granny flat on the property. There are also possible capital gain tax implications to consider. State regulations Each state has varying rules to how granny flats can be used, including if they are permitted to produce an income, who can occupy them and where they can be constructed on the property. In New South Wales granny flats can be built without council approval and can be occupied by anyone. The property can’t be smaller than 450 square metres, must maintain a three-metre setback from the rear of the property, a 0.9-metre setback from the side boundaries and can’t exceed a maximum internal space of sixty square metres. They can’t exceed the maximum building height of 8.3 metres, must maintain a three-metre distance from any existing tress over four metres tall, can’t be built over an easement and the property must have residential zoning. In the Australian Capital Territory (ACT) granny flats can be built and occupied by anyone with council approval. The property must be at least 500 square metres, the granny flat can’t be smaller than forty square metres and no larger than ninety square metres, in a residential zone, compliant with the total plot ration for the block and compliant with the Australian Standard AS 4299 Adaptable Housing Class (Class C). They must be a water sensitive urban design, compatible with exterior building materials of existing buildings in the neighborhood and compliant with setbacks. Granny flats in the ACT must have one parking space which cannot be in the ‘front zone’, clear unobstructed pedestrian access, reasonable levels of privacy and private open space for tenants. Under emergency planning changes to help alleviate the housing crisis granny flats in Queensland can now be occupied by anyone. Previously in order to rent out a granny flat to any non immediate family member council approval was required. Without council approval granny flats can’t be larger than eighty square metres and built no further than twenty metres from the main house. Two storey granny flats can’t be taller than 9.5 metres, the rear and side walls must not exceed 7.5 metres, the highest point of the roof cannot be greater than thirty degrees on small lots and can only be built in low or medium density zones. Three storey granny flats can’t be taller than 11.5 metres, the rear and side walls must not exceed 9.5 metres and the maximum point on the top of the roof cannot be greater than thirty degrees. Granny flats must have one parking space (additional to those for the main house) and a separate entrance. In Western Australia only one granny flat can be built on each lot, the lot size needs to be a minimum of 450 square metres (unless your local council states otherwise) and a maximum floor area of seventy square metres (some councils may state up to 100 square metres). Approval from the local council is required if the granny flat will be occupied by a person outside of the household. Once a granny flat is built the land cannot be subdivided (unless your local council states otherwise). The regulations on granny flats in Tasmania is complex as it varies between councils. Developing land for residential purposes requires approval from your local council and granny flats must have a maximum floor size of 60 square metres or no more than thirty per cent of the total area of the main home. All building and plumbing works must comply with the standards of the National Construction Code […]

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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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Accelerating depreciation with the Backing Business Investment incentive

BMT team — Tue, 12 May 2020 23:47:43 +0000

The Federal Government has announced a Backing Business Investment (BBI) incentive to provide support for Australian businesses. The incentive is designed to encourage business investment and support growth. In this article we will explore: What businesses are eligible? Eligibility requirements for small business entities Example: Accelerated depreciation for small business Eligibility requirements for other business entities Example: Accelerated depreciation for medium sized business What assets are eligible? How do I make sure I can claim the Backing Business Investment incentive? Key points: • The BBI incentive is in place until 30 June 2021 • Eligibility requirements and accelerated depreciation rules differ between small and larger businesses • Plant and equipment assets purchased and installed on or after 12 March 2020 and until 30 June 2021 are eligible for the benefit The BBI incentive offers benefits to a wide range of Australian businesses through accelerated depreciation deductions of qualifying assets. This is a time-limited incentive that is only available over a fifteen month period. What businesses are eligible? The BBI incentive recognises that there are different depreciation needs for small and larger businesses. As a result, eligibility requirements for the BBI incentive depends on the type of business that is claiming. Eligibility requirements for small business entities For small businesses with an aggregated turnover up to $10 million and use the simplified depreciation rules can place eligible assets to the general small business pool. Doing so allows the small business to deduct an amount equal 57.5 per cent of the assets value in the same financial year. In following years, the asset will continue to be depreciated under the general business pool rules. Example: Accelerated depreciation for small business Lou owns LM Marina Pty Ltd that has an aggregated annual turnover of $9 million for the 2019-20 income year. On 1 May 2020, Lou purchased brand new travel lifts for $160,000, for business use. Under previous arrangements, LM Marina Pty Ltd would depreciate the travel lifts using their general small business pool. This would allow them to deduct 15 per cent of the asset’s value when added to the pool, resulting in a tax deduction of $24,000 for the 2019-20 financial year. Under accelerated depreciation, LM Marina Pty Ltd will instead claim a deduction of 57.5 per cent when added to the pool, leading to a deduction of $92,000 for the 2019-20 financial year. Eligibility requirements for other business entities Businesses that have an aggregated turnover up to $500 million and don’t use the simplified depreciation rules, may be eligible to deduct a specified amount of the qualifying asset. In this case, the business can deduct 50 per cent of the asset’s value in the financial year, in conjunction with the standard rate of depreciation calculated on the remaining value after the 50 per cent is removed. Example: Accelerated depreciation for medium sized business A&X Construction Pty Ltd has an aggregated turnover of $250 million for the 2020-21 income year. On 1 August 2020, A&X Construction Pty Ltd purchased a medium sized crane for $1 million for business use. Under previous arrangements, A&X Construction Pty Ltd could claim 13.33 per cent in depreciation when using the diminishing value method, based on the crane’s effective life of 15 years. However, with the accelerated depreciation, A&X Construction Pty Ltd can claim a depreciation deduction of $566,650 in the 2020-21 financial year. This includes 50 per cent of the crane’s value under accelerated depreciation ($500,000) plus 13.33 per cent of the remaining $500,000 under the standard depreciation rules ($66,650). What assets are eligible? Only new plant and equipment that are depreciated under Division 40 are eligible if they are acquired from 12 March 2020, and first used or installed by 30 June 2021. Second-hand assets, capital works and assets that are depreciated under Division 43, and assets acquired and installed outside of the timeframes aren’t eligible. For example, if a business signed a contract for a new fit-out on 3 March 2020 and it was completed and installed after 12 March 2020 the business would not be eligible for the BBI incentive on the new fit-out. How do I make sure I can claim the Backing Business Investment incentive? If you are an eligible business, you can ensure that you claim this incentive by obtaining a tax depreciation schedule. For over twenty years, BMT Tax Depreciation has been the most trusted depreciation specialist in the industry. Over this time, BMT has helped many business owners maximise their cash flow with depreciation deductions. To learn more, contact the expert team on 1300 728 726. Related articles Government stimulus package to maximise commercial property cash flow for businesses

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Are tiny houses a good investment?

BMT team — Fri, 07 Jun 2019 04:00:01 +0000

The tiny house trend has made headlines for its minimalist lifestyle and quirky appeal. More of a social movement than a fad, these small dwellings have also become a hot topic in the Australian property market. Tiny houses are compact living spaces often built on wheels. They help people live debt free and are often more environmentally friendly than traditional housing. But are tiny houses a good investment? Here’s what you need to consider before buying a tiny house investment property. Contents: Buying a tiny house Investment opportunities Tiny house depreciation deductions Buying a tiny house Before you look to buy an investment property, you’ll need to assess your finances and calculate all the associated holding costs. One of the key benefits of a tiny house investment is that the purchase cost is significantly less than a traditional home. Depending on the size and design, tiny houses range from $50,000 to $90,000. Tiny houses offer a way for people to enter the property market without gaining a substantial mortgage. However, if financing is required it’s important to note that a tiny home with wheels will be legally classed as a caravan and issued with a Vehicle Identification Number. Typical financing options for this type of tiny house include: caravan loan line of credit personal loan extension of an existing mortgage (you must have enough equity in an existing property to qualify). Another important consideration is the legalities around living in tiny houses on private land. These regulations generally exist at a local council level so it’s necessary to research the laws specific to your area. Investment opportunities Short-term holiday letting is a good way to earn an income from a tiny house investment. Holiday renting has become increasingly popular in recent years due to the rise of platforms like Airbnb. As a result, the rules surrounding short-term letting have also evolved. For example, New South Wales legislation has specific planning laws for holiday letting. The law states that if the host is present, they can use their home for short-term holiday letting all year round without submitting a development application to local council. If the host isn’t present, that property can only be leased for up to 180 days per year in Sydney and 365 days in all other areas of the state. For this reason, it’s essential you understand the requirements of holiday letting in your state or territory. Along with legislation, there are several expenses to consider when leasing a tiny house as short-term holiday accommodation. Many rental services and booking platforms charge a certain percentage per booking and this will need to be factored into your rental rate. You’ll also need to think about cleaning costs as guests will expect their accommodation to be cleaned to a high standard. Be sure to consider all relevant costs when deciding a price to charge for your tiny house. For more advice on holiday rentals, read ‘Tips for buying a holiday rental property.’ Tiny house depreciation deductions An income-producing tiny house may be eligible for thousands of dollars in depreciation deductions. Owners can generally claim tax depreciation for the time a tiny house was rented or 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. It’s important to note that a tiny house is legally classified as a caravan, meaning tax depreciation schedules will adhere to rules and regulations relating to caravans, not houses. A caravan, and therefore a tiny house, has an effective life of twenty years and can be depreciated at 5 per cent using the prime cost method or 10 per cent using the diminishing value method. Assets within the tiny house such as flooring, blinds and even solar panels can be depreciated based on their effective life which is set by the tax commissioner and updated regularly through tax rulings. To find out how much you could claim on a tiny house investment, Request a Quote or speak with one of the expert team at BMT Tax Depreciation on 1300 728 726.

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What you should know about the role of a Quantity Surveyor

BMT team — Tue, 05 Feb 2019 04:12:55 +0000

Do you know what the role of a Quantity Surveyor is? It’s a title that causes confusion, with many people associating the job with the Cadastral Surveyors you sometimes see measuring angles and distances with tripods on the side of the road. Quantity Surveyors play a different role and are qualified professionals specialising in building measurement and construction cost estimation. Quantity Surveyors are required at various stages throughout a building’s construction. However, some specialise in calculating construction costs of residential and commercial buildings for property depreciation purposes. This includes measuring and calculating historical construction costs for claiming building write-off based on the cost of the structural element of buildings. Their skills are so valued that Quantity Surveyors are recognised under Tax Ruling 97/25 as one of the few professions with the ability to calculate costs for the purposes of depreciation. Quantity Surveyors are also required to be registered tax agents. When an investor engages BMT Tax Depreciation for a depreciation schedule, we will carry out a site inspection of the property to identify and record the contained assets to calculate their deductions. A specialist Quantity Surveyor documents every qualifying asset in a property and calculates their depreciable value to ensure that the investor maximises their deductions. This includes measuring rooms with a laser measurer, recording assets’ brand or model numbers and photographing improvements at the property. Quantity Surveyors ensure full compliance with Australian Taxation Office (ATO) regulations, meaning all deductions are accurately evidenced in the event of an audit. BMT Tax Depreciation CEO Bradley Beer says that the most rewarding aspect of the job is showing investors the difference that claiming depreciation will make to their bottom line. “Investors are very happy when they learn they will save thousands of dollars each year by claiming depreciation,” Bradley said. “There are so many property investors who simply aren’t aware of depreciation or don’t maximise their claims.” Bradley and the team at BMT have completed site inspections on all property types ranging from residential houses and apartments to commercial properties such as hotels, industrial warehouses, farms and even multimillion-dollar wineries. No stone is left unturned when it comes to recording and valuing assets. “I did a site inspection for The Block 2018 apartments at The Gatwick and recorded every light fitting, smoke alarm and piece of furniture,” Bradley explained. “Investors are often surprised by what they can claim and the lucrative deductions that can be found at their properties.” The thoroughness of BMT’s Quantity Surveyors helps investors to capture every asset and ensure they maximise their depreciation deductions. BMT Quantity Surveyors specialise in tax depreciation and have a detailed knowledge of current ATO Tax Rulings. They are members of the Australian Institute of Quantity Surveyors (AIQS), ensuring compliance with industry regulations and Australian Standards. BMT Quantity Surveyors are also registered tax agents with the Tax Practitioners Board (TPB). The TPB is the national body responsible for the registration and regulation of Tax Agents ensuring compliance with the Tax Agents Services Act 2009 (TASA). For more information on the role of a Quantity Surveyor, contact the expert team at BMT on 1300 728 726 or request a quote today.

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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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The Block 2018 contestants tackle depreciation

BMT team — Wed, 17 Oct 2018 22:17:53 +0000

While it may not have been the reason behind their design and styling choices, The Block 2018 contestants recently discovered that their apartments hold millions of dollars of hidden value for savvy investors in the form of depreciation. BMT Tax Depreciation Chief Executive Officer, Bradley Beer, appeared on the show for a surprise depreciation challenge, which saw the contestants guessing the depreciation value of their apartments. The contestants were suitably baffled. “No one knows anything about depreciation tax, no one, unless you’re in the industry, or you’re a multi-million dollar investor or you’ve got an uncle who knows what they’re talking about,” said Jess when she and Norm were asked to determine what could be claimed from their apartment. The couples tried hard to calculate the construction costs but eventually gave up and guessed, or in Norm and Jess’ case, went to the pub for a drink – a reminder that all that hard work is better left to the experts. The results were astonishing, and all contestants severely undervalued their apartments. Kerrie and Spence’s apartment attracted the highest depreciation deductions, with over $3 million over the life of the property. This depreciation makes their apartment much more attractive to investors and could be just the encouragement a potential buyer may need to offer the winning bid come auction day. Before the luxury apartments go to auction, let’s take a look around some of the season’s winning rooms to see which assets attract depreciation deductions. Kerrie and Spence: kitchen Courtney and Hans: living and dining area Kerrie and Spence: master ensuite Kerrie and Spence: kitchen Kerrie and Spence’s winning kitchen astounded the judges with its functionality and inclusion of top-range appliances. The kitchen features an impressive wine fridge and a ridiculously spacious butler’s pantry. The kitchen received a perfect score from the judges, with Neale commenting, “for anyone who loves cooking, who loves entertaining, this is paradise.” Investors could claim capital works deductions on the kitchen’s cabinetry, tapware, sinks and benchtop. The rangehood, oven, stools and light fittings would all attract plant and equipment deductions, providing investors with additional cash flow. Courtney and Hans: living and dining area With the biggest living and dining area in the history of The Block, this space was destined to make a statement. And make a statement it did, wowing judges with emerald, velvet chairs and a surprise bar which emerged on cue with a command from Alexa. The area was described as ‘grandeur’ and ‘sophisticated’ and the judges especially loved the sitting area with two opposing lounges. “It’s not about having distractions. It’s not about having a television. It’s about actually interacting with each other, I love that,” Darren said. The space would also impress investors, who could claim plant and equipment deductions for the furnishings including the sofas, television, rug and coffee tables. The flooring, air conditioning and fixed bar cupboards would also entitle investors to lucrative capital works deductions. Kerrie and Spence: master ensuite Kerrie and Spence’s monochromatic winning ensuite dazzled with simplicity and space, with the judges commenting on the balanced styling and attention to detail. Unlike Hayden and Sara’s extravagant $75,000 ensuite, complete with a golden bath tub, Kerrie and Spence embraced a minimalist theme. The ‘regal’ bathroom cabinets were a big hit with the judges. “I love that curved edge, it just gives it that little touch of retro,” said Neale. The couple chose a grey, herringbone tile for their feature wall. The tiles and fixed items within the ensuite can be claimed as capital works deductions. This includes the tapware, sinks, cabinets and marble bench. Investors can claim the ensuite’s accessories as plant and equipment deductions. For everyday Australian’s who are considering buying an investment property, whether it be a Block apartment or a regular house or unit, discover what deductions you can claim and request a quote for a tax depreciation schedule today. All images from 9 now The Block.

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What are the depreciation differences between old and new residential properties?

BMT team — Fri, 14 Sep 2018 06:18:11 +0000

Property depreciation is a non-cash tax deduction available to the owners of income producing properties. As a building gets older, items wear out – they depreciate. The Australian Taxation Office allows property owners to claim this depreciation as a tax deduction. The Australian Taxation Office (ATO) clearly defines two types of depreciation allowances available for property investors: Division 43 capital works allowance Division 40 plant and equipment depreciation The capital works allowance refers to what an investor can claim for the wear and tear that occurs to the structure of the property. This includes any structural improvements that may have been made during a renovation. Plant and equipment depreciation on the other hand, refers to the deductions an investor can claim for the wear and tear that occurs to the easily removable fixtures and fittings found within the property. Investors often wonder about the depreciation differences of older properties compared to new properties. The simple answer is that the owners of newer properties will receive higher depreciation deductions. However, investment properties both new and old can attract depreciation deductions for their owners. Capital works deductions are calculated at a rate of 2.5 per cent of the structural costs of a building and can be claimed per year for forty years. Construction costs generally increase over time, making building write-off deductions on new buildings higher. Owners of older properties can claim the residual value of the building up to forty years from construction. For example, if an investment property is five years old, the owner will have thirty five years left of capital works deductions to claim. Capital works deductions are governed by the date that construction began. Any property that was constructed after the 15th of September 1987 attracts capital works deductions. If your property was constructed prior to that date, you should still contact BMT as you can claim for any renovations that the property has undergone, including those that were carried out by previous owners. Under new legislation passed on Wednesday 15th November 2017, owners of second-hand residential properties (where contracts exchanged after 7:30pm on the 9th of May 2017) are no longer eligible to claim depreciation on existing plant and equipment assets, such as air conditioning units, solar panels or carpet. However, owners of these properties can still claim depreciation on the plant and equipment assets they purchase for their property. There has been no change to capital works deductions, which generally account for anywhere between 85 and 90 per cent of a claim. The good news is that this means Australian property investors can still claim thousands of dollars in deductions. Additionally, if you purchased a property before 7:30pm on the 9th of May 2017, you can continue to claim as before. Find out more about the 2017 depreciation legislation changes. It’s more important than ever to work with a specialist Quantity Surveyor to ensure that all deductions are identified and claimed correctly under the new legislation. Each and every BMT Tax Depreciation Schedule will be tailored to suit an individual’s property investment scenario, ensuring that all deductions are maximised. For further information on any property investment scenario, speak with one of the expert staff at BMT Tax Depreciation on 1300 728 726.

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What are plant and equipment deductions?

BMT team — Wed, 05 Sep 2018 05:14:18 +0000

In a recent article, we explored capital works deductions. The other category that makes up depreciation is plant and equipment, or division 40. Plant and equipment depreciation refers to the deductions an investor can claim for the wear and tear that occurs to the fixtures and fittings located within a property. They are assets which are considered by the Australian Taxation Office (ATO) to be easily removed from the property. Investors can claim depreciation deductions for more than 6,000 different ATO recognised assets. Some examples include the carpets, blinds, air conditioners, hot water systems, smoke alarms and ceiling fans. Each of the assets is assigned an individual effective life and depreciation rate by which depreciation should be calculated. The depreciation rates and effective lives of all ATO specified plant and equipment assets differ by asset and even by industry. The ATO recognises that plant and equipment items will wear out more quickly than the building itself and likely need replacing sooner. Changes to depreciation rules in 2017 On Wednesday the 15th of November 2017, Parliament passed the Treasury Laws Amendment (Housing Tax Integrity) Bill 2017, which brought about some major changes to plant and equipment depreciation claims. The changes mean that owners of second-hand residential properties (where contracts exchanged after 7:30pm on the 9th of May 2017) are no longer eligible to claim depreciation on existing plant and equipment assets located within their property. However, owners of affected properties can still claim depreciation on the plant and equipment assets they purchase for their property directly. It is important to note that there are still thousands of dollars to be claimed by Australian property investors, as there has been no change to capital works deductions, which typically make up between 85 to 90 per cent of an investor’s total claimable amount. Previously existing depreciation legislation has been grandfathered, meaning investors who already made a purchase prior to this date can continue to claim depreciation deductions as per before. To read more about the new depreciation legislation and how this applies to a range of property investment scenarios, download our comprehensive white paper document Essential facts: 2017 Budget changes and property depreciation. It’s more important than ever to work with a specialist Quantity Surveyor to ensure that all deductions are identified and claimed correctly under the new legislation. Each and every BMT Tax Depreciation Schedule will be tailored to suit an individual’s property investment scenario, ensuring that all deductions are maximised. For further information on any property investment scenario, speak with one of the expert staff at BMT Tax Depreciation on 1300 728 726. .

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