» Property Managers

How depreciation education can set you apart

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

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

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Resi Rates helps landlords and property managers resolve disputes

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

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

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Understanding the depreciation process for landlords and tenants

BMT team — Wed, 19 Oct 2016 23:08:35 +0000

As a central point of contact for property investors, property managers play a vital role in educating them about the benefits of claiming depreciation deductions. This often results in them referring landlords to a specialist quantity surveyor who will provide a comprehensive tax depreciation schedule outlining what depreciation deductions can be claimed for their property. Given the property manager is entrusting their clients to a third party, they may still receive questions from both landlords and their tenants about what is involved throughout the process of completing the schedule. Property Managers may like to know what steps will be involved so they can reassure their clients along the way and ensure that the depreciation schedule provided is both comprehensive and maximises the investor’s claim. With this in mind, let’s take a look at what’s involved in the process: Pre-purchase estimates Initial enquiry Confirmation and collection of information Site inspection Completion of the depreciation schedule Providing the schedule to the client and their nominated Accountant 1/ Pre-purchase estimates An investment property doesn’t have to have been purchased by an owner in order for them to discover its depreciation potential. Specialist quantity surveyors can provide tax depreciation estimates for any property listed for sale. By the same token, if an investor is looking for a Property Manager to find an appropriate tenant and to oversee the rental of a new purchase, a depreciation estimate will be a valuable tool to help secure new listings. 2/ Initial enquiry It’s recommended that property investors contact a specialist quantity surveyor to obtain a depreciation schedule after the settlement of a property. Often investors delay getting a schedule until closer to tax time or wait until the following year because they have only owned the property for a short time. There are benefits to getting in early. Partial year deductions can be maximised and even if the end of financial year is a long way away, investors can speak with their Accountants about the option of submitting a Pay As You Go (PAYG) withholding variation. 3/ Confirmation and collection of information Once an investor decides to go ahead and engage a Quantity Surveyor to complete a depreciation schedule, they will collect all of the relevant information about the property required. This includes the address, suburb and state; the name/s the schedule is to be made out in for tax purposes; the purchase price, land value, settlement date and age of the building; and details if the owner has ever lived in the property. The quantity surveyor will ask whether the property will be rented furnished or unfurnished and if there are any renovations which have been completed prior to or after purchase. Finally, they’ll ask for details of whom to contact in order to arrange a site inspection. 4/ Site inspection A quantity surveyor should always complete a site inspection as part of the process of providing a depreciation schedule, as this allows them to gather sufficient information in order to prepare the report. The quantity surveyor will make it easy for the property manager by contacting the tenant on their behalf to arrange the inspection when required. Once a suitable time has been arranged, a depreciation expert will visit the property to take detailed notes, measurements and photographs. They will use a laser measurer to gather details about room sizes to later help calculate construction costs and the depreciable value of flooring. Photographs will be taken of each individual plant and equipment asset, including curtains, dishwashers, smoke alarms, garbage bins and light fittings to name just a few. For certain items, for example the rangehood and oven, they’ll note the specific brand. This will help them later to establish the depreciable value of the items. Installation dates on appliances can also be useful, as can information on whether the property operates on gas or electricity and whether the air conditioning is ducted or a split system. 5/ Completion of the depreciation schedule All information gathered during the site inspection will be used by the quantity surveyor to prepare the depreciation schedule. Sometimes additional research will need to be undertaken, for example contacting local councils for more information about renovations completed by a previous owners contained in a DA approval. The quantity surveyor will then prepare the schedule using depreciation methodology outlined in tax legislation. For any residential property in which construction commenced after the 15th of September 1987, there will be capital works deductions available for the building structure. For properties older than this date, renovations completed within the legislated dates may entitle the owner to capital works deductions too. Each of the itemised plant and equipment items found during the site inspection will depreciate based on an individual effective life set by the Australian Taxation Office. This is where the accuracy of the information collected is crucial. 6/ Providing the schedule to the client and their nominated Accountant The final step involves sending an electronic or hard copy of the schedule to both the landlord and their nominated Accountant. The investor can then visit their Accountant who has all the information on hand to include the depreciation claim in the client’s annual income tax assessment. A schedule should last forty years, with the deductions the owner can claim each year outlined. Deductions will also be provided in both the prime cost and diminishing value method. Some tenants may not understand, given that the depreciation deductions won’t benefit them and the site inspection may be an inconvenience, but it helps to explain that it is a once off occurrence and that the owner usually requests a schedule because they are looking to benefit from their property for the long term. For landlords, ultimately the deductions outlined in the schedule will provide valuable additional cash flow which can be used to help maintain the property and complete necessary repairs when required. This can have a flow on affect by helping to keep the tenants happy and encouraging them to stay longer, […]

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Kirsty Spraggon – building your network ARPM 2014

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

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

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