» Tax Depreciation Schedule

Missed claiming depreciation last financial year? It’s still not too late!

BMT team — Fri, 12 Jul 2024 23:52:02 +0000

You don’t need to daydream about a lottery win to get thousands in your pocket. If you’re a property investor, a natural process called depreciation means you can claim thousands, sometimes tens of thousands, without spending any money. BMT research suggests that approximately 80 per cent of investors fail to take full advantage of property depreciation. In some instances, it’s because they aren’t aware of when they are eligible to claim. BMT has answered your questions about when you can claim depreciation, and what to do when your tax depreciation schedule isn’t prepared before June 30. Contents What is property depreciation and how do you claim it? Order a schedule after June 30 and still claim for the last financial year Your tax depreciation schedule starts from your settlement date Genuinely available for rent Partial year deductions Key points: A tax depreciation schedule can be completed after June 30 Depreciation deductions start from your settlement date, not when the report was completed Depreciation can be claimed if the property is genuinely available for rent Partial year deductions are available for all investment properties What is property depreciation and how do you claim it? Depreciation is the natural wear and tear of a building’s structure and assets. If you’re an investor, you can claim this depreciation as a tax deduction. Depreciation is called a non-cash deduction because you don’t need to spend any additional money in order to claim it. A tax depreciation schedule is an essential piece of the depreciation puzzle. The first step of this process is a site inspection completed by a specialist site inspector from a quantity surveying firm. From here, the firm prepares a tax depreciation schedule that includes all depreciation deductions available. An accountant uses this schedule to determine your deductions at tax time. The tax depreciation schedule lasts the life time of the property and can be revised if any changes are made, such as a renovation. Order a schedule after June 30 and still claim for the last financial year You can still claim depreciation for the last financial year if your property’s tax depreciation schedule is completed after June 30. For example, if you ordered a tax depreciation schedule in July 2024 you can still claim depreciation deductions for the 2023/24 financial year. The only difference ordering a schedule before June 30 makes is how quickly you can claim back the schedule fee. This 100 per cent tax deductible fee can only be claimed in the year it was paid. Your tax depreciation schedule starts from your settlement date It’s important to know that it’s never too late to claim depreciation. When depreciation is missed in previous years, a tax depreciation schedule lets you claim back missed dollars. This is because the schedule starts from your settlement date, not the date the schedule was prepared. If you own a second-hand property and can’t claim depreciation on previously used assets, it’s important to let the quantity surveyor know of any new additions you have added to the property. This will allow you to claim depreciation deductions on them as they aren’t affected by the 2017 legislation changes. Genuinely available for rent Your investment property doesn’t need to be leased to allow you to claim depreciation deductions. As long as the property is ‘genuinely available for rent’, depreciation can be claimed. This means if there’s a gap where you are searching for new tenants, depreciation deductions are still available. Partial year deductions You can still claim depreciation deductions if you settled the property during the financial year, or if it’s only available for rent for part of the year. A tax depreciation schedule considers what is called ‘partial year deductions’. This means even if there is only a few days, weeks or months left in the financial year, depreciation deductions are still available. Partial year deductions are calculated on a pro-rata basis using the time the property was used as an investment. There are also mechanisms in depreciation legislation that a specialist quantity surveyor will apply to increase the claim for a partial year, even if the partial year is only a few days. This includes the immediate write off and low value pooling which allows you to claim particular qualifying new assets in full or at an accelerated depreciation rate regardless of how long they were owned. BMT specialises in preparing comprehensive tax depreciations schedules. We ensure that nothing is missed and that the highest level of compliance is maintained. To learn more about depreciation and the services offered by BMT, Request a Quote or contact the team on 1300 728 726.

The post Missed claiming depreciation last financial year? It’s still not too late! appeared first on .

When do you need a depreciation schedule for your rental property?

BMT team — Fri, 05 Jan 2024 17:20:09 +0000

We know that depreciation is the natural wear and tear of property and assets over time. And in good news, investors just like you can claim it as a tax deduction that could result in thousands of dollars back at tax time. What is a tax depreciation schedule and who needs one? A tax depreciation schedule is a document prepared by a specialist quantity surveyor. This schedule outlines every depreciation deduction available throughout the lifetime of the property. If you own a rental property that is eligible for depreciation, you should get a tax depreciation schedule, or at least a depreciation estimate, to help with your decision. This will allow you to claim depreciation deductions each financial year when lodging your tax return, so you pay less tax. When do you need a depreciation schedule? Ideally, you will get a tax depreciation schedule after you make an investment property genuinely available for rent but before the end of the financial year. This is important because depreciation is only available for properties that are genuinely available as a rental. However, you can still obtain a depreciation estimate prior to this so you have a better idea of the likely deductions available. Getting this done before your first tax lodgement after the purchase of the investment property will ensure you can claim depreciation as soon as possible. This will provide a much-needed cash flow boost after your finances take the hit from the upfront costs of purchasing the property. What happens if you get a tax depreciation schedule later? Let’s say you purchased and rented out the property from the start of the 2021/2022 financial year but have only just realised you can claim depreciation. The good news is that it’s not too late to claim back dollars in missed deductions. A tax depreciation schedule will give you the information needed to back-claim missed deductions in a compliant way. How far back the claim can go varies. The schedule always starts from when you purchased the property and the ATO will usually allow you to back-claim for at least two years, sometimes more. The schedule gives figures for your accountant to amend previous tax returns, so you can adjust the taxable income with the applicable depreciation deductions for the given financial year. Do you need a new tax depreciation schedule after a renovation? This answer depends on the nature of the renovation. A substantial renovation can include removing and rebuilding entire parts of a property so it may need a new schedule. A cosmetic renovation like renovating a kitchen, retiling a bathroom or replacing a hot water system will only need an update to the current schedule. BMT Tax Depreciation can easily make updates to their existing schedules to ensure any addition or renovation is included where depreciation is concerned. Now that you know why and when a tax depreciation schedule is needed to maximise cash from your investment property, contact BMT on 1300 728 726 or Request a Quote today.

The post When do you need a depreciation schedule for your rental property? appeared first on .

What you need to know when claiming property depreciation

BMT team — Thu, 16 May 2019 23:15:03 +0000

With tax time fast approaching it’s essential investors understand the importance of property depreciation and its financial benefits. In this article we will explore: What is property depreciation? Why you need a tax depreciation schedule What sets BMT Tax Depreciation Schedules apart Claiming property depreciation What is deductible under capital works allowance? What are plant and equipment assets? The difference between repairs and improvements What is property depreciation? Depreciation is the natural wear and tear that occurs to a building and the assets within it over time. Why you need a tax depreciation schedule Any property which generates income may be eligible for thousands of dollars in depreciation deductions. A BMT Tax Depreciation Schedule ensures investors don’t miss out on the hidden cash flow available for their properties. What sets BMT Tax Depreciation Schedules apart BMT is the largest and most successful tax depreciation company in Australia. During FY 2017/18, we found residential property investors an average first year deduction of almost $9,000 Tax Ruling 97/25 states Quantity Surveyors such as BMT Tax Depreciation are one of the only professions qualified to estimate construction costs for depreciation Our schedules last for the forty-year life of an investment property BMT Tax Depreciation Schedule fees can be claimed in your tax return. Claiming property depreciation A BMT Tax Depreciation Schedule includes a detailed outline of two major components – capital works deductions (division 43) and plant and equipment assets (division 40) Capital works allowance refers to the tax deductions for the building’s structure and items considered to be permanently fixed to the property. Plant and equipment assets refer to items which can be easily removed from the property. What is deductible under capital works allowance? Capital works allowance or ‘building write-off’ is a deduction available for the structure of the building and items such as sinks, baths, built-in kitchen cupboards, clothes lines and doors Generally, residential properties in which construction commenced after 15th September 1987 can claim capital works deductions at 2.5 per cent for forty years Commercial properties in which construction commenced after 20th July 1982 are also eligible, though the deductions will vary based on the type, age and historical construction cost of the property. What are plant and equipment assets? Plant and equipment assets refer to items that can be easily removed from the property or are mechanical in nature such as hot water systems, ovens, carpet and blinds Deductions for plant and equipment assets are based on the condition and quality of each individual asset Under current legislation, owners of second-hand residential properties who exchanged contracts after 7:30pm on 9th May 2017 cannot claim deductions for previously used plant or equipment assets. Owners are still eligible to claim for any brand-new plant or equipment assets they add to the property It’s important to note that investors who purchase brand-new residential and substantially renovated properties, commercial real estate or add new plant and equipment assets to a second-hand residential property can still claim substantial depreciation deductions. Visit BMT to enquire about the possible depreciation deductions available on a current or potential investment property. The difference between repairs and improvements Deductible repair: returning items or property to their original state to retain their value. Repairs attract an immediate 100 per cent deduction in the year of expense Improvement: improving the condition of an item or property beyond that of when it was purchased. Improvements are capital in nature and as such, must be depreciated over time. For a free assessment of likely depreciation deductions, contact BMT Tax Depreciation today on 1300 728 726.

The post What you need to know when claiming property depreciation appeared first on .

Are depreciation schedules regulated in any way?

Kevin Turner — Wed, 17 Jun 2015 01:44:09 +0000

In a recent Real Estate Talk show – Are depreciation schedules regulated in any way? BMT CEO Brad Beer gives his expert advice on the regulation of depreciation schedules and what to watch out for with depreciation estimates. Here’s The Transcript: We had a question from a listener during the week who writes, “I inspected some units currently being constructed and was shown a depreciation schedule. The agent said it was just an estimate. How reliable would it be, and is it risky using these estimates to calculate the unit’s viability?” To answer that question, a man who knows all about tax depreciation schedules, Brad Beer from BMT Tax Depreciation. Kevin: I had a question from a listener during the week who writes, “I inspected some units currently being constructed and was shown a depreciation schedule. The agent said it was just an estimate. How reliable would it be, and is it risky using these estimates to calculate the unit’s viability?”To answer that question, a man who knows all about tax depreciation schedules, Brad Beer from BMT Tax Depreciation. Good day, Brad. Brad: Hi, Kevin. Kevin: Sonia’s question there, is that something she should be cautious about? Brad: It’s an interesting question. As Quantity Surveyors, we do a lot of estimates of what sort of depreciation might be available. The important thing is looking at who it’s being prepared by. Has the builder prepared it? Has a specialist Quantity Surveyor prepared it? What exactly the numbers are made up of. Have a look at it. Now, we have calculators on the website you can use to check against. You can talk to us or someone who’s reputably doing depreciation. It should have a minimum and maximum range of depreciation potentially available. Obviously, it’s an estimate. When we’ve done that as an estimate, we don’t have all the information. But we’ve done a lot of depreciation schedules, so if we’ve done it, and we know what we’re doing, we should come up with numbers that you should be able to rely on being pretty close to the truth. Using the minimum or a bit less than the minimum to be really safe is the thing to do. Making sure it’s prepared by someone who knows what they’re doing is the important thing. Kevin: Are these depreciation schedules, or the supply of these, regulated in any way, Brad? Brad: The regulation is not very heavy as far as an estimate like that. The costs that are used for the purpose of depreciation – a Quantity Surveyor’s cost – will be acceptable. Sometimes a thing to be a little bit wary of is when it has an agent or someone who is selling you the property. It’s probably in their interest to make the numbers look high, so you really want to double-check it or make sure it’s done by a reputable company that’s not prepared to move the numbers to help sell the unit. That’s the thing to be really careful of. Kevin: How would you check out their credibility? Go to their website? Brad: Go to their website. Ask your Accountant, “Have you used their report?” Have the Accountant have a look at that. If it’s not done by a depreciation specialist, get a depreciation specialist to actually have a look at it. Kevin: That’s actually a very good point – going to your Accountant – in all of these things. If you’re buying any property, you should always be checking with your Accountant and your Solicitor, and running it by them anyway. Brad: If they’re an Accountant who deals with property investors – and if you’re a property investor, you probably want that to be the case – they will probably have specialist depreciation guys that they regularly do use. Maybe the Accountant would want to ask their contact, just to get a double-check on that to make sure it’s not something done by the builder or something to make it look more than it really is going to come out at. Kevin: Is it reasonable that someone would want to get their own depreciation schedule done even if they are looking at buying? Would that help them substantiate those figures, Brad? Brad: That’s most definitely the certain way as a potential buyer of any property, not just one that’s new that has a depreciation estimate done. There are calculators on websites, and they’re free. You can go in and use them to check and see. Put some of the information in yourself, and see if it comes out close to what’s been provided. You can always talk to my guys about your particular property, and send us some photos. We’ll have a discussion and give you a rule of thumb based on what we can see. We don’t charge for that to have a bit of a look at it. If you want to be certain, you get one done properly, absolutely, but normally it’s done after the fact. We can get pretty close with an estimate, and we’ll give you a range. Whenever you’re plugging in and crunching your numbers on property, it’s always good to be conservative to start, and then at the end of the process anything else is a bonus. Kevin: Very good advice from Brad Beer, one of our recommended suppliers. Of course, all BMT Tax Depreciation’s details are on our website, and you can check out their featured channel, as well. Lots of great information there for you, and in fact a link straight back to their site, as well, if you want to check that. Brad, thank you so much for your time. We’ll catch up again soon. Brad: Great. Thanks, Kevin. This article was first seen on RealEstateTalk.com.au and you can listen to the full show at RealEstateTalk.com.au and while you’re there subscribe and receive their weekly podcast (or the transcripts) where Kevin interviews Australia’s leading property experts.

The post Are depreciation schedules regulated in any way? appeared first on .

Could your client be smiling too?

BMT team — Fri, 29 May 2015 06:00:31 +0000

Imagine how one of your investor clients would react if you could tell them how to receive $3,536 in extra cash flow with little to no effort. With property depreciation this is no longer just an idle fantasy. Amy’s Property Manager found this out herself when she recommended her client contact BMT Tax Depreciation to find out what depreciation deductions were available for her investment property. Amy purchased a nine year old three bedroom house in an outer suburb of Sydney for $610,000 just over one year ago. Prior to making her depreciation claim Amy’s investment property was earning a rental income of $495 per week with a total income of $25,740 per annum, while her yearly expenses totalled $41,028. Towards the end of her first year owning the property Amy’s annual after tax outlay amounted to $9,631 or $185 per week. Amy mentioned to her Property Manager that she was concerned about her cash flow. That’s when her Property Manager suggested she speak with BMT Tax Depreciation to find out what depreciation deductions she could claim for the building structure and the plant and equipment assets contained within the property. BMT Tax Depreciation was able to complete a thorough site inspection and provided a detailed tax depreciation schedule showing the deductions available for her property for the next forty years, including $9,585 in the first year. The following table provides a summary of Amy’s scenario, both before and after depreciation was claimed. A BMT Tax Depreciation schedule reduced Amy’s annual outlay for the property to $6,085 per annum or $117 per week, a difference of $68 per week or $3,536 per year. “By claiming depreciation, I was able to significantly reduce the amount of tax paid on my investment property. I can’t thank my Property Manager enough for recommending BMT Tax Depreciation to me,” Amy said. Recommend an expert With just a few words you have the power to completely transform your investor clients’ cash flow situation. BMT also offer a range of additional services and information to help Property Managers add value to their existing service such as face to face or webinar training sessions for your staff and clients, educational brochures and material that you can send on to your clients. Order now: Order educational material for your office today If you feel you have a client who we can make smile, please do not hesitate to contact one of our friendly staff on 1300 728 726, or request a quote today.

The post Could your client be smiling too? appeared first on .