» depreciation schedule

Start claiming depreciation deductions sooner

BMT team — Thu, 04 Apr 2024 00:13:07 +0000

With the end of financial year fast approaching, now is the time to get your tax depreciation schedule sorted if you haven’t already. There are significant advantages to ordering a depreciation schedule immediately after purchase that can help you to maximise your return and make the most of your investment. Before we look at those advantages, let’s recap what depreciation is and how it assists property investors. Contents: Depreciation deductions Claim the cost of your schedule straight away Partial year claims Receive payments regularly using Pay as You Go (PAYG) Claim missed deductions Depreciation deductions The Australian Taxation Office (ATO) allows property owners to claim the depreciation, or decline in value of an asset, as a tax deduction. Depreciation is a non-cash deduction, meaning an investor doesn’t need to spend any money to claim it. For this reason, depreciation deductions are often overlooked. This is a costly mistake for investors, as depreciation deductions carry significant taxation benefits. With tax time approaching, property owners should be sure they are claiming all the deductions to which they are entitled. Owners of income-producing properties can claim depreciation deductions related to the building’s structure as well as the plant and equipment assets within the property. It’s important to organise a depreciation schedule before the end of the financial year to maximise your deductions and claim everything you’re eligible for from the year. Failing to claim depreciation means missing out on thousands of dollars. In FY2022/2023 to-date, BMT found investors an average first year deduction of almost $9,000. Claim the cost of your schedule straight away A depreciation schedule has a one-off cost which lasts the life of the property (forty years) and will ensure the owner claims their depreciation entitlements correctly. The cost of the depreciation schedule is 100 per cent tax deductible. One of the advantages to ordering and paying for a depreciation schedule before 30 June is that an investor will be able to claim the fee straight back that financial year. This not only means less time out of pocket, but it eliminates the risk of forgetting to claim the depreciation schedule’s fee as a tax deduction in the following financial year. Partial year claims If a property has been owned and rented for only a short period, investors often postpone obtaining a tax depreciation schedule until the next year. However, there are ways in which partial year deductions can be maximised, resulting in extra cash for the owner. Usually, the total depreciation available in the first financial year is adjusted according to the portion of the year the property is owned. For example, if a property is owned for six months, then 50 per cent of the depreciation could become available. However, specialist quantity surveyors can use legislative tools to make partial year claims beneficial to property owners, regardless of the time a property is owned and rented. Immediate write-off is one tool used. Any item added to a property costing less than $300 can be immediately written off within the first year. This is regardless of how many days the property is owned in that year. Low-value pooling can also be used to maximise claims over a short period of time. Low-value pooling applies to items in an investment property that are worth less than $1,000. Placing items in a low-value pool allows the owner to accelerate the rate of depreciation, increasing deductions earlier. A high-quality tax depreciation schedule should include a partial year claim based on the time the property is rented. Receive payments regularly using Pay as You Go (PAYG) Investors often look forward to tax time. Many of the losses from holding a property can be claimed back, including interest, rates, repairs and maintenance, property management fees and depreciation deductions. Many investors may not realise that they don’t have to wait all year to benefit from the deductions available to them. Instead, they can improve their cash flow throughout the year simply by nominating to use a Pay as You Go (PAYG) withholding variation. Introduced in July 2000, a PAYG withholding variation allows individuals to vary the amount of tax withheld by their employer in each pay to anticipate their tax liabilities. This means that they can take advantage of the deductions available to them regularly, rather than waiting until the end of a financial year for their tax refund. By selecting a PAYG withholding variation, a property investor’s expected tax refund for the financial year is estimated. This allows their employer to take less tax out of their wages. As can be seen in the example, a PAYG withholding variation will provide added flexibility for a property investor. Having access to the extra money during the year makes it easier to manage cash flow, especially when there can be surprise costs such as urgent repairs or maintenance. The additional income also gives the owner the option to invest the extra money or reduce loan liabilities. It is important to note that submitting a PAYG withholding variation does not replace a normal tax return. A tax return still needs to be filed at the end of the year to calculate the actual amount of tax liability. Claim missed deductions If you have not previously claimed depreciation deductions on your investment property, the ATO allows you to recoup missed payments for past financial years by adjusting your tax return. This is particularly useful for first time investors who were previously unaware of depreciation deductions. It is always advisable to stay on top of your finances by claiming deductions in the applicable year, as delaying your claim will only add extra confusion and stress to your next tax return. Ordering your tax depreciation schedule before 30 June is important if you want to maximise your returns and keep your finances on track. If you have any questions about claiming depreciation, contact the expert team at BMT Tax Depreciation on 1300 728 726 or Request a Quote.

The post Start claiming depreciation deductions sooner appeared first on .

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.

The post Why you need a site inspection for a tax depreciation schedule appeared first on .

What is a depreciation schedule for a rental property and why you need one

BMT team — Sun, 02 Aug 2020 23:58:24 +0000

Local rental rates, market demand, unemployment, wage growth and other economic conditions can affect the return from your investment property. A common trait held by successful property investors is their ability to maximise cash flow during both the peaks and troughs of the market. One way they do this is by always claiming maximum depreciation deductions from their properties. In this article we will look at: What is rental property depreciation? Why do you need a depreciation schedule for a rental property? Do all investors need a rental property depreciation schedule? What does a depreciation schedule for a rental property include? How to organise a depreciation schedule for a rental property Key points: A depreciation schedule for a rental property allows the owner to claim thousands in depreciation deductions each financial year All rental property owners need a depreciation schedule to maximise returns Organising a BMT Tax Depreciation Schedule is easy. What is rental property depreciation? Rental property depreciation is the natural wear and tear of a building and its fixtures and fittings over time. As a property investor, you can claim depreciation as a tax deduction each financial year. One little-known fact about depreciation is that it’s a non-cash deduction. This means that you don’t need to spend any money in order to claim it. Despite this, many investors don’t claim rental property depreciation because they don’t know how or aren’t aware of the benefits. Why do you need a depreciation schedule for a rental property? If you’re thinking that you can go to your accountant and they will automatically determine your depreciation deductions, this is not the case. A tax depreciation schedule completed by a specialist quantity surveyor is an essential step to claiming depreciation. Your accountant then uses this to determine your depreciation deductions each financial year. Do all investors need a rental property depreciation schedule? Essentially, if an investor wants to claim depreciation they must have a tax depreciation schedule completed prior to the claim. This includes single owners and split owners. What does a depreciation schedule for a rental property include? A tax depreciation schedule holds everything you need to claim depreciation for the life time of your property (forty years). Some key features of a BMT Tax Depreciation Schedule includes: Breakdown of both plant and equipment and capital works deductions You can claim depreciation under two categories – capital works and plant and equipment. Your schedule breaks down these deductions to the year, making tax time simple and easy. Forecasts It’s always good to see what deductions are available in the future. A BMT Tax Depreciation Schedule provides multiple forecasts to ensure you know how much money you can get back in your pocket each financial year. Diminishing value and prime cost deductions Plant and equipment deductions can be claimed using either the diminishing value or prime cost methods of depreciation. Once a method of depreciation is chosen, it can’t be changed. A schedule provides an overview of the deductions using both methods and your accountant can help you choose the best method for your investment strategy. Pooling schedules Plant and equipment assets that are eligible for the low-value pool can be depreciated at an accelerated rate. The specialist BMT team identifies every qualifying asset for the low-value pool and includes these in pooling schedules. Designed for accountant software and ATO MyTax BMT works closely with accountants to make sure that claiming depreciation is both beneficial and easy. A BMT Tax Depreciation Schedule is designed to seamlessly integrate with accounting software and the Australian Taxation Office MyTax portal. Easy to amend Property is a tangible asset, therefore changes and improvements can be made over time through renovations and repairs. If you’ve made an improvement to your investment property, you don’t need to have an entirely new schedule completed. BMT can easily update your current schedule to include any new additions at a small, tax deductible fee. How to organise a depreciation schedule for a rental property The first step is to enlist a specialist quantity surveyor, such as BMT Tax Depreciation. BMT can provide an obligation-free estimate of likely deductions. If you wish to proceed with having the schedule completed, a specialist BMT site inspector will come to your property to complete a comprehensive site inspection. The site inspection is a significant step. Doing so ensures that nothing is missed, and any deduction determined from the schedule is compliant. Both the Australian Institute of Quantity Surveyors and the National Tax and Accountants’ Association support the requirement for physical site inspections and note that costly errors can be made when they are not completed. To learn more about what a depreciation schedule is for a rental property, Request a Quote or contact BMT on 1300 728 726.

The post What is a depreciation schedule for a rental property and why you need one appeared first on .

Site inspections are a must for depreciation schedules

BMT team — Wed, 08 Apr 2020 23:55:11 +0000

In recent weeks, the Covid-19 pandemic has raised questions about the necessity of a site inspection when preparing a tax depreciation schedule. At BMT Tax Depreciation, we have always believed that having a thorough site inspection is essential to achieve the highest possible deductions, while maintaining full compliance with the Australian Taxation Office (ATO). This position is endorsed by the Australian Institute of Quantity Surveyors. Click here to read more. During this time of uncertainty, we want to assure you that we are taking every precaution to ensure the health, safety and wellbeing of our clients and staff during our site inspections. All BMT site inspectors are required to carry safety equipment including masks, gloves and hand sanitiser, and adhere to social distancing rules. Where possible, they will also remove their shoes. Along with this, we ask all occupants to open doors and turn on lights during the inspection, so that our specialist site inspector doesn’t need to touch anything. We are staying updated on the latest government requirements and are adapting our operations to abide by these rules and regulations. Rest assured that safety is our top priority during these unprecedented times. Having prepared tens of thousands of depreciation schedules every year, we know that a site inspection plays a vital role in the depreciation process, particularly when it comes to supporting your claim in the event of an ATO audit. We have a well-established and long-lasting relationship with the ATO, and they often require evidence to justify the deductions in a depreciation schedule. It is important that we can directly give feedback based upon the inspection that we completed, regardless of how long ago that was. Our site inspections also ensure accuracy. Our specialist site inspector will measure the building and floor coverings, note down the construction method, workmanship, materials used and condition of the property. We will look for any evidence of works completed, both recently and anything that might have taken place in the last 30-40 years. The current owner of an income-producing property can often claim deductions for work that was completed by previous owners. We document everything that we can, making notes and taking photographic records. In the case of residential apartments or office towers and industrial complexes with a strata plan, the site inspector will assess all common property items. Each owner has a right to depreciate a portion of the common areas based up their percentage of ownership, which is usually outlined on the strata plan our building unit plan. Rest assured that safety is our top priority during these unprecedented times. Another important step during the site inspection is to identify as much qualifying plant and equipment within a property as possible. This includes all removable or mechanical assets like hot water systems, stoves, floor coverings and so on. The higher the ratio of plant and equipment in a claim, the higher the deductions will be in the earlier years of ownership. The full site inspection only takes around 30 minutes to complete. BMT will even organise the inspection with the property manager and tenant directly at their convenience. For commercial property, the process is much the same. We will document any new fit-out installed or assets removed during an upgrade or tenant change. When construction work or assets are removed from a property during its income production period, there is often remaining unclaimed depreciation that can be written off. BMT staff are experts at determining how much of the existing claim can be written off and will make the necessary adjustments to your depreciation schedule. While not all depreciation schedule suppliers include site inspections as part of their service, we believe it’s necessary in order to claim the maximum deductions possible, ensure accuracy and maintain tax office compliance. We know that when an inspection isn’t performed, depreciation deductions get missed and amendments inevitably need to be made to your schedule. These amendments cost you money. The same applies if the site inspection is not completed by a specialist. Contracting or outsourcing the inspection is very risky. BMT will only ever use specialist staff to ensure quality, accuracy and accountability if the ATO ever conduct an audit. At this current time, BMT continues to inspect properties to provide quality depreciation schedules. As a valued member of the BMT community, we thank you for your continued support. For our latest position on the developing Covid-19 pandemic please visit https://www.bmtqs.com.au/covid-19.

The post Site inspections are a must for depreciation schedules appeared first on .

What information do you need to order a depreciation schedule?

BMT team — Thu, 02 Feb 2017 23:59:54 +0000

If you’re thinking about ordering a depreciation schedule for your investment property, it might seem a little overwhelming at first, especially if it’s your first time even hearing about depreciation. The good news is that besides supplying us with a few details about your property, it’s a fairly straight forward process. The preliminary information we collect will allow us to get started on preparing a comprehensive report for your investment property, and we always strive to gather all the information we need from you in one go. Here is a summary of the information you should have on hand when ordering a schedule from BMT. 1. Property address* – This is the most important piece of information we require. Besides the obvious fact that we need to know what property we’re preparing a schedule for, once we have the address we are able to carry out research to find out any details you may be missing or unsure of (including some of the items listed below such as purchase price, settlement date and age). 2. Your name and contact details* – We will ask for your name and contact details as well as the name the schedule should be made out in for tax purposes. Where there is more than one owner, BMT can organise a split report to ensure that each owner’s deductions are maximised. You can find out more about split reports and their benefits here. 3. Purchase price and land value – The purchase price and land value will assist us in calculating depreciation for your property. 4. Settlement date – This will be the date from which the life span of plant and equipment items in your investment property are reset and start depreciating from. 5. Approximate age of building – This will determine the feasibility of your property for capital works deductions and will affect what and how much you can claim. In a nutshell, legislation states that for any residential property that commenced construction prior to 15th of September 1987, the owner will not be able to claim capital works deductions. For commercial buildings this date is the 20th of July 1982. Read more about how older properties can still benefit from depreciation. 6. Have you ever lived in the property and if so, when did you move out? This information allows us to accurately implement legislation such as the low value pool and immediate write off. It also allows us to determine if you can go back and amend any previous year’s tax returns. 7. A list of any loose assets – In a commercial property this could include any computers and machinery that could affect deductions and in residential properties, we need to know if you plan to or currently rent the property furnished, as these furnishings can also be depreciated and included in the schedule. 8. The size of the building – This is generally required for commercial properties only and should be measured in square metres. 9. A brief description of any additions or renovations – Any additions or changes to the property will be included in a depreciation schedule. This can be particularly beneficial to owners of older properties where the original building may not qualify for capital works deductions but renovations or additions completed after the qualifying date will. 10. A brief description of the building itself – Is it a residential house, an apartment, office building, warehouse or hotel, etc. 11. Your Property Manager’s details – We ask for your Property Manager’s (or the main contact’s) details so we can arrange for access to the property to carry out an inspection. 12.Your Accountant’s details – If you wish, we can send a copy of the completed schedule directly to your Accountant, to make the process easier for you. *Compulsory information The process of gathering this information can easily be done over the phone and doesn’t usually take long at all. If you don’t have any of this information – don’t stress. We’re happy to talk it through and gather the information you do have, and usually that is enough to get a start on preparing your depreciation schedule. Order your depreciation schedule here.

The post What information do you need to order a depreciation schedule? appeared first on .

Why depreciation remains relevant for older properties

BMT team — Fri, 09 Sep 2016 06:40:23 +0000

One of the most common questions specialist Quantity Surveyors are asked by investors when they call to discuss whether it’s worthwhile obtaining a tax depreciation schedule for a property is ‘how will the building’s age impact deductions found?’ While the age of a building may make a difference to the overall deductions found; it is always worthwhile making the call to discuss whether it is feasible to provide the schedule for a particular property. Many investors make the mistake of not making this call, as they assume their property will be too old and therefore think claiming the depreciation deductions won’t be beneficial. Below we’ve provided some of the main reasons why this often isn’t the case and why it’s best to seek expert advice. There are two elements you can depreciate In any investment property, there are two elements that make up a depreciation claim. These are the capital works allowance available for the gradual wear and tear of the building structure and plant and equipment depreciation for the mechanical or removable fixtures and fittings found within the property. The Australian Taxation Office (ATO) does place some restrictions on whether owners can claim depreciation for the capital works component. For residential properties, construction must have commenced after the 15th of September 1987 and for commercial properties this date is the 20th of July 1982. However, no such restrictions apply when depreciating plant and equipment items. Deductions for plant and equipment assets will be calculated based on their individual quality using an effective life the ATO set for each item. This effective life will be reset from the date of settlement. There are over 6,000 plant and equipment assets recognised by the ATO and these can result in substantial depreciation claims that benefit the property owner. Older properties have often undergone renovations If you’ve just purchased an older property, the chances are that at some time since the building was originally constructed it may have undergone some form of renovation. While sometimes renovations to a property are obvious, you may not even be aware they have occurred. Updated plumbing and electrical wiring are two good examples of work that could have been completed that aren’t obvious. Investors can claim depreciation deductions for any structural works which have been completed within the relevant dates. For an investor who has purchased a property originally constructed in 1985 for example, but with a kitchen updated and an outdoor entertaining area added in the 2010, this will mean they can claim the capital works allowance for these new additions. The cost of a depreciation schedule is worthwhile After outlaying expenses to acquire an investment property, often investors don’t want to spend any more money. The good news is that obtaining a tax depreciation schedule from a specialist Quantity Surveyor is 100 per cent tax deductible. Depreciation schedules range in cost but it is recommended to obtain a comprehensive schedule which includes a detailed site inspection of the property. Many specialist Quantity Surveyors will provide a guarantee that the deductions you will receive in the first full financial year will outweigh any costs involved in obtaining a depreciation schedule. Ultimately, the deductions you claim reduce your tax liability and therefore improve your cash return. This additional money provides investors with cash flow they can use to help offset any costs involved in holding a property. Obtaining a depreciation schedule, no matter the age of a property should be a priority for all investors. A quick phone call is all that is needed to establish an estimate of what can be claimed and discuss what is involved in the process. This article originally appeared online on Australian Property Investor. You can view the original article by clicking here.

The post Why depreciation remains relevant for older properties appeared first on .

Do depreciation deductions apply to you?

BMT team — Fri, 08 Apr 2016 04:32:11 +0000

Owners of income producing properties are eligible to claim tax deductions for a number of expenses involved in holding a property. Most investors are aware of some of the deductions they are entitled to; for example they know they can claim their Property Manager’s fees, council rates and any repairs and maintenance costs. However, all too often investors are unaware of property depreciation and as such they frequently miss out on the valuable returns these deductions can provide them with when they complete their annual income tax returns. To help investors maximise the deductions they can claim from an investment property in the lead up to tax time, let’s take a look at some key points to help you understand depreciation. What is depreciation? Over time, any building and the assets contained within it will experience wear and tear. Legislation allows the owners of any income producing property to claim this wear and tear as a tax deduction called depreciation. Unlike other expenses involved in holding a property, such as repairs and maintenance for example, an investor does not need to spend any money to be eligible to claim it. For this reason, depreciation is often described as a non-cash deduction. Types of depreciation deductions available 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. As a general rule, any residential building where construction commenced after the 15th of September 1987 will entitle their owner to capital works deductions at a rate of 2.5 per cent per year for up to forty years. Owners of older buildings constructed prior to 1987 should still find out what deductions are available, as often these buildings will have undergone some form of renovation which can result in capital works deductions for the owner. 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. There are more than 6,000 different assets recognised by the ATO which an investor can claim depreciation deduction for. Some examples include the carpets, blinds, air conditioners, hot water systems, smoke alarms and ceiling fans. Unlike structural items, no date restrictions apply when claiming depreciation on plant and equipment assets. Each of the assets is assigned an individual effective life and depreciation rate by which depreciation should be calculated. Who should you contact to calculate and maximise your deductions? Often an investor will make the mistake of thinking their Accountant will claim all of the deductions available in their investment property. When it comes to depreciation, however, it is important to consult an expert in this area. Legislation recognises Quantity Surveyors as being one of a few select professionals with the knowledge necessary to estimate construction costs for depreciation purposes. A specialist Quantity Surveyor will use their skills to provide a depreciation schedule which outlines the deductions an investor can claim for any specific property at the end of financial year. An Accountant will then use the figures outlined within the depreciation schedule when submitting the investor’s individual income tax return at the end of financial year. How will depreciation help an investor? The additional funds an investor receives by claiming depreciation can have a significant impact on their available cash flow. On average, an investor can claim between $5,000 and $10,000 in depreciation deductions in the first financial year. Visit our handy case study page to see an example scenario showing how depreciation can make a difference for you. Alternatively, one of our expert staff are happy to provide a free assessment of the available deductions in any property.

The post Do depreciation deductions apply to you? appeared first on .

Depreciation deductions are like finding hidden Easter eggs

BMT team — Wed, 23 Mar 2016 22:42:19 +0000

On your first glance of an investment property this long weekend, all you might think about is the places the Easter Bunny could hide chocolate eggs where the kids won’t be able to find them. As specialist Quantity Surveyors, some of these same hiding spaces contain much more. When we look around investment properties during our site inspections, our eyes are peeled for treasures that can maximise an investors claims and put more money in their pocket during tax time. Quantity Surveyors look for two specific categories of items the Australian Taxation Office (ATO) allows investors to claim depreciation deductions for: Structural works (capital works deductions) that may have been completed during the original construction of the property and any new additions or renovations that have been added Easily removable fixtures and fittings (plant and equipment depreciation) both inside and outside the property To help explain what we’re looking for, we wanted to present you with an Easter egg hunt showing the depreciable items that can be found in the yard of one investment property below. As the image shows, even the most unexpected items in a property can provide depreciation deductions for the owner of an income producing property when they complete their tax return. Who of you would have thought that the swing set and the sand box would allow you to claim depreciation? It goes to show why it is so important to ask one of our expert staff to come out and perform a site inspection and prepare a depreciation schedule outlining the maximum possible deductions for you. Of course, the $1,575 in first year deductions outlined within our hunt is only a very small portion of the deductions we’ll find you. We will also find depreciation deductions in the original building structure of any property constructed after the 15th of September 1987 and for any renovations or additions which have been completed within the legislated dates (even if these were completed by a previous owner). Plant and equipment assets such as stoves, ovens, hot water systems, carpets, range hoods, door closers, garbage bins and air conditioners will also add up to significant depreciation claims for an investor. So hop to it. Contact one of our expert staff and request a depreciation schedule. You might just find yourself jumping for joy when you visit your Accountant at the end of financial year.

The post Depreciation deductions are like finding hidden Easter eggs appeared first on .

Investors of all ages reaping the benefits

BMT team — Thu, 10 Dec 2015 03:23:24 +0000

A recently released 2015 Domain Consumer Insights Study suggests that investing in property is a pastime of Australians of all ages. One in five Australians own investment properties and while many might assume that the majority of investors who make up this statistic are baby boomers, this couldn’t be more untrue. The Domain report found that the number of Generation Y’s who own multiple investment properties is now on par with Baby Boomers. 16 per cent of Generation Y’s own two or more properties compared with 17 per cent for both Baby Boomers and Generation X’s. The report also found that the age Australian’s are buying investment properties is getting younger, with the average age of investor purchasers sitting at thirty four years of age. While this is the average, those Generation Y investors who become investment property owners generally do so at the young age of just twenty five. The average age for purchasing an investment property for those who belong to the Generation X category is thirty five years, while for Baby Boomers the average age that they became property investors was forty five. However, the report shows that a significant number of Generation Y’s are still living at home with Mum and Dad, with 26 per cent of those who fall into this category living at home. Future investment in property also looks set to have a bright forecast, as almost half of those planning to invest over the next three years will be first time investors purchasing for the first time. With such significant numbers purchasing or planning to purchase an investment property, it will become even more important for investors to take advantage of the tax depreciation benefits available from these properties. 80 per cent of investors still fail to claim the maximum depreciation deductions for their investment property. Yet it is as simple as obtaining a comprehensive depreciation schedule outlining the available deductions to make sure all the benefits from a property are received come tax time. Investors who would like more information about the depreciation deductions available in their property can speak to one of BMT’s expert staff on 1300 728 726 or they can request a quote online. To read a press release from Domain about the study and download their full fact sheet visit: www.domain.com.au/group/press_release/property-moguls-australian-property-investors-starting-young/.

The post Investors of all ages reaping the benefits appeared first on .

We’re going back… back to the future

BMT team — Wed, 21 Oct 2015 00:44:15 +0000

In honour of Back to the Future Day, we’re taking you on a radical journey through time to take a look at some of the key dates from 1985 which have impacted Australian history and influenced land ownership and property investment in this country right up until today. I wonder what Marty McFly and Doc Brown would have thought if they arrived on October 21st 2015 after travelling from 1985 to find out how some of the decisions made in that year would affect the course of Australia’s history? It’s Saturday, October 26, 1985 in Australia and Bob Hawke is the Australian Prime Minister. This may have been the day in which Doc Brown first discovered his time machine could transport Einstein, Marty and himself to any time throughout history, but in Australia this was a date in which we paid recognition to some of the traditional owners of this land by handing back ownership of Uluru to the local Pitjantjatjara Aboriginals. Recognition of Australia’s traditional land owners continues be a very important part of our national discourse still today. At the time when Doc first realised the invention of his time machine had been a success, Australia had only just recently introduced new tax legislation that would affect the ownership and sale of a rental property and the deductions which investors could claim. On the 18th of July 1985, legislation was introduced which allowed property investors to claim capital works allowance on a residential property. At the time of its introduction, investors were entitled to claim capital works deductions on the building structure at a rate of 4 per cent over twenty five years for any building in which construction commenced after this date. This legislation was later changed on the 15th of September 1987 and from this date onwards, investors could claim capital works deductions at a rate of 2.5 per cent for forty years. While changes to depreciation legislation have meant that owners of properties in which construction commenced prior to the 15th of September 1987 may no longer be eligible for capital works deductions (the twenty five year period in which investors could claim the 4 per cent has now past), this does not necessarily mean that owners of properties constructed prior to this date will not benefit from depreciation. In 2015, owners of both new and old investment properties still take advantage of depreciation. Today we continue to see thousands of investors maximise depreciation deductions by obtaining a BMT Tax Depreciation Schedule and the numbers are growing. However, many owners of older properties in particular fail to maximise their deductions because they assume they are ineligible to claim depreciation. While the above legislative rules apply, they don’t necessarily mean that there will be no depreciation available to claim. Older properties have often undergone renovations and any work completed within the legislated dates could entitle its owner to claim capital works deductions. “Great Scott!” There are also significant deductions available for the plant and equipment assets contained within the property. It is the individual effective life and depreciable value which determines what an investor can claim for these items. It is as important now as ever before to make the call to find out what depreciation deductions are available for the future. On the 20th of September 1985, the government introduced the Capital Gains Tax (CGT) One of number of key tax reforms originally introduced by the Hawke/Keating Government in 1985, CGT is basically the tax payable on the difference between what it cost you to purchase an asset and the amount you receive when you dispose of it. In the case of an investment property, this is the difference between the original purchase price of the property including any capital buying costs and the price the property is sold for plus any selling costs. When you sell an asset such as a property, this triggers what is called a ‘CGT event’ and the owner will make a capital gain or loss on the property. Legislation surrounding CGT changed significantly after the 21st of September 1999. From the 2000-2001 income year individuals or small business owners who held an investment property for more than twelve months from the signing date of the contract before selling the property were entitled to a 50 per cent exemption from CGT. This rule, and other CGT exemptions that become relevant if a property is a primary place of residence, still exist today. An Accountant can help by providing financial advice for your future to prepare for any capital gains tax implications should you decide to sell your property. 1985 median house prices compared with 2015 According to data from Australian Bureau of Statistics, the average median house price across the capital cities in Australia during 1985 was $70,782. This was led by Canberra with an annual median house price of $90,625 and followed by Sydney with an annual median house price of $88,350. Perth was the capital city with the lowest annual median house price recorded at the time at just $52,050. Fast forward in time to the Domain House Price Report released for the June 2015 quarter and prices have increased significantly. The national average median house price is now sitting at $701,827 with Sydney leading the way on house prices with a median of $1,000,616. It’s Wednesday 21st October, 2015 in Australia and Malcolm Turnbull is the Australian Prime Minister Based on the above increase in prices over time, it’s little wonder that housing affordability has become a hot topic for our government. What happens next, we’ll have to wait and see… that is, unless someone get’s a hold of a DeLorean and tells us where we will be thirty years from now…

The post We’re going back… back to the future appeared first on .