» Outdoor deductions

Claim depreciation on outdoor entertaining assets and save thousands

BMT team — Mon, 21 Jan 2019 05:43:33 +0000

There is no better time of year for outdoor entertaining than summer. The season’s warm afternoons offer perfect conditions for barbecuing with friends or relaxing in the pool. Australians love spending time outdoors, so it’s important to equip your investment property with assets that entice tenants to lease the property long-term and allow them to enjoy the property in summer. While outdoor assets such as swimming pools, patios and outdoor furniture don’t come cheap, property investors can recoup some of the costs for these assets by claiming depreciation. The below infographic shows some of the first full financial year depreciation deductions property investors can claim for common outdoor entertaining assets. Click on the image to expand. The owner of this investment property could claim: $1,400 for the table setting $1,250 for the deck $660 for the barbecue $640 for the pot plants $400 for the cushions $375 for the sails $250 for the bench seat $200 for the fountain, and $91 for the ceiling fan This adds up to an impressive $5,266 in the first full financial year alone, making it much more affordable to own an investment property. Other outdoor assets which attract depreciation deductions include retaining walls, fences, clothes lines, garden sheds, solar lights and watering systems. Investors can claim depreciation on assets for the duration of their individual effective life, as determined by the Australian Taxation Office. Outdoor assets generally have shorter effective lives than indoor assets as they wear out more quickly and therefore need replacing sooner. As an example, indoor furniture can be claimed over 13.33 years whereas outdoor furniture can be claimed over five years. Regularly inspect outdoor assets for wear and tear Seasoned investors are aware of the importance of keeping tenants happy by ensuring items at the property are kept in a good condition. Ensure you regularly inspect outdoor entertaining assets to check for any wear and tear. If your property has recently become vacant, consider making some improvements to your outdoor area to help attract tenants and add value to your investment property. If you plan on removing and replacing old assets, you may be entitled to claim 100 per cent of the unclaimed value as a deduction. Contact BMT Tax Depreciation to calculate your unclaimed deduction on 1300 728 726. To assist your decision of when to replace outdoor entertaining assets, use BMT’s Rate Finder tool to view the individual effective life and depreciation rates for the assets at your investment property.

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Outside there’s $3,491 more in deductions to be claimed

BMT team — Fri, 18 Sep 2015 05:53:23 +0000

As spring brings warmer weather to our backyards, it is a great time for property investors to think about the outdoor areas of their investment properties. Outdoor areas in investment properties contain a number of structures and assets which are worth thousands of dollars for their owners. These items also experience wear and tear over time. The Australian Taxation Office (ATO) allows owners of income producing properties to claim this wear and tear as a depreciation deduction when completing their annual income tax assessment with an Accountant. Before an investor can claim depreciation, it is recommended they consult with a specialist Quantity Surveyor to arrange a tax depreciation schedule for the property. A tax depreciation schedule will outline all of the deductions available for the structure of the property as well as the plant and equipment assets contained both inside and outside of the property. Assets located outside of an investment property are amongst those frequently missed by investors. When an investor requests a tax depreciation schedule from a Quantity Surveyor, they will include a detailed site inspection of the property to take photographs and record every asset found. The deductions a specialist Quantity Surveyor outlines on a depreciation schedule are split into two types. Structural items will be classified as capital works deductions, while assets which can be easily removed from the property can be claimed as plant and equipment depreciation. Items classified as capital works will depreciate at a rate of 2.5 per cent each year over forty years. Plant and equipment assets, on the other hand, each have an individual effective life as set by the ATO. The following graphic shows some of the depreciable plant and equipment assets and structural items found within the yard of an investment property as well as the first year depreciation deductions an investor could claim for these items. Examples of outdoor structures which depreciate, as shown in the graphic, include the in-ground swimming pool, pool fencing, shade sails, pavers and window awnings. Other common structural assets found in the yard which depreciate include concrete slabs, clothes lines and sleepers. Depreciable plant and equipment assets found in the yard of the pictured property included solar garden lights, outdoor furniture, garden watering systems, swimming pool filters and chlorinators. Other common examples of depreciable plant and equipment assets which might be found in the yard include garbage bins, garden sheds and freestanding barbeques. As the assets outside a property experience wear and tear, it also makes sense to check in regularly with your Property Manager to see if there are any necessary repairs and maintenance required. If there are, it is also best to check with your specialist Quantity Surveyor before completing any work to the property. While work completed to repair damage (such as mending part of a fence) or to prevent deterioration to a property (for example oiling a deck) is able to be claimed as an immediate deduction in the year of the expense, any work which improves the condition or value of an object beyond it’s original state at the time of purchase will be considered a capital improvement. Capital improvements completed will also be classified as either capital works deductions or depreciated as plant and equipment using the asset’s individual effective lives. If an investor already has a depreciation schedule and plans to complete improvements to the yard, a specialist Quantity Surveyor can provide information on any remaining deductions for items planned for removal. Removing items could entitle an investor to claim additional deductions using a process known as ‘scrapping.’ Using this process, any remaining depreciable value can be claimed as a deduction in the financial year the item is removed. When any new structural additions or plant and equipment assets are added to an investment property, it is recommended to ask your specialist Quantity Surveyor to provide an updated depreciation schedule outlining the deductions for any new items. Maximising depreciation deductions for items outside a property and carefully considering whether any improvements can be made can add thousands of dollars to an investor’s pocket. It also can add additional value to the property and appeal to tenants, helping to increase your rental return. Quantity Surveyors can provide a free estimate of the depreciation deductions available in any investment property. Request an estimate and obtain advice from BMT Tax Depreciation today. This article was first seen on sourceable.net

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Are you burying cash in the backyard?

Bradley Beer — Wed, 29 Oct 2014 05:32:48 +0000

Deductions don’t stop at your doorstep We always laugh when we hear stories of people who stick their money in a pickle jar and bury it in their backyard rather than leave it with a bank. The sad fact is that thousands of Australian property investors are doing the same thing by leaving unclaimed tax deductions buried down in the bottom of their garden. Many property investors claim for the structure and assets within their investment property, but overlook the deductions just outside the front door. Property depreciation deductions can be claimed for structures and assets on the outside of an investment property just as much as those inside. To get the most out of your tax deductions, you should always make sure that your depreciation claim includes all outdoor assets on a property, otherwise you could find yourself missing out on thousands of dollars in additional cash flow. Know your deductions The Australian Tax Office (ATO) classifies depreciable items on investment properties into two separate categories; capital works and plant and equipment. If you have a verandah or patio on your investment property, then capital works deductions could be available. Any permanent structures or non-removable assets are claimable as capital works for their effective life, so even a clothesline could yield you some deductions. Below is a list of some common capital works depreciation can be claimed for, but that many investors are missing out on. Plant and equipment deductions on the other hand are claimable for any removable or mechanical fixtures and fittings such as furniture, sheds or exterior lighting. The table below shows some common outdoor plant and equipment items and their potential depreciation deductions to demonstrate the claims you may be missing out on. Appreciation with depreciation If your investment property is on a large plot of land, remodelling the backyard to make the most of the space available is a great way to increase the property’s appeal to potential tenants and purchasers. Property depreciation is a powerful means of recovering some of the cost of these improvements, allowing you to build bigger and better to enhance the gains received from these additions. Don’t get left out in the cold Wear and tear continues to occur on investment properties whether it is being claimed for as depreciation or not. It’s definitely worth checking to make sure you are claiming for the structure and fittings on the exterior of your property to ensure your deductions are being maximised, otherwise a significant portion of your cash flow could be getting left out on the back lawn rather than your back pocket.

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Outdoors can offer more

BMT team — Thu, 31 Jan 2013 22:57:20 +0000

Over the holiday season, many of us have spent quite a bit of time entertaining and enjoying our backyard. Whether you spent the hot summer weekends lying by the pool, had Christmas lunch with the family on your back deck, or had an Australia Day barbeque with a gathering of friends under a covered entertaining area, remember that more than likely while you were doing so, so too were the tenants of your rental property. Improving the outdoors area can add great value to a rental property and help to attract potential tenants. Property investors also need to be aware they can maximise depreciation deductions by claiming on the eligible items in the front yard, backyard and balconies of their rental properties. Depreciation deductions can be claimed on these outdoors assets as either capital works deductions or plant and equipment depreciation. Some of the outdoors structures which qualify for capital works deductions include: Retaining walls Fencing Sleepers Concrete slabs Patios Clothes lines In-ground pools and Above ground pools. Examples of eligible plant and equipment items include: Outdoor furniture Garden sheds Garden hoses Garden watering systems Solar lights Pool filters and Pumps. If you are considering improving the areas outside a rental property, take special notice when removing and replacing old assets, particularly retaining walls, garden sheds and driveways. Investors may be entitled to claim 100% of the unclaimed value as a deduction and should contact a specialist Quantity Surveyor to calculate the values and construction costs of the renovation. Read more: Outdoors appreciation increases depreciation

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