Site inspections

Find out why a site inspection is a crucial part of a depreciation schedule

Site inspections

Find out why a site inspection is a crucial part of a depreciation schedule

To complete a comprehensive tax depreciation schedule, it is necessary to conduct a physical site inspection. It is impossible to identify every available depreciation deduction without one.

What is a site inspection?

A site inspection involves a detailed examination of a property to gather information that is essential for accurately assessing and calculating the depreciation deductions that can be claimed by the property owner for tax purposes.

site-inspection

What does a site inspection involve?

During a site inspection, the inspector assesses various components of the property, such as the building structure, fixtures, fittings, and any other assets that might be eligible for depreciation deductions. The purpose of this inspection is to identify and document the condition, value, and estimated useful life of these components, as they play a key role in determining the allowable depreciation deductions that the property owner can claim over time on their tax return.

The information gathered during the site inspection is then used to create a comprehensive tax depreciation schedule. This schedule outlines the eligible assets, their respective values, and the calculated depreciation deductions that can be claimed each year.

site-inspection

A physical site inspection is crucial for several reasons:

Accuracy and best practice

A site inspection is crucial in ensuring that a property investor accurately claims the depreciation deductions they are entitled to, while adhering to tax regulations and guidelines. It also provides a clear record of the condition and value of assets for future reference.

Comprehensive identification of renovation

Renovations, including those completed by previous owners, can be identified only through site inspections, particularly those missed by the untrained eye like house restumping or older renovations completed many years ago.

Our data reveals that 66% of investment properties have undergone a qualifying addition or renovation, which can only be determined after a thorough physical site inspection. These properties contain significant deductions that go unidentified without a physical site inspection.

Maximising depreciation benefits

Conducting a physical site inspection is essential to maximise the cash return. A specialist inspector thoroughly examines every aspect of your property, capturing detailed notes, photographs, and measurements. This meticulous approach ensures that every single structure and asset is claimed to its fullest potential.

Compliant depreciation claims

Neglecting a site inspection, whether physical or virtual, could expose both clients and quantity surveyors to penalties imposed by the ATO. A physical inspection will ensure depreciation claims are compliant and justifiable. In the event of an Australian Taxation Office audit, evidence of claims is often required. A site inspection will help to substantiate depreciation claims. Photos taken by a landlord, property manager or tenant simply will not have the detail required.

Risks of not carrying out a site inspection

Not undertaking a site inspection leaves both the client and quantity surveyor open to sanctions/fines which may be imposed by the ATO should there be insufficient evidence to support a depreciation claim. The main risk to a client if a site inspection is not carried out, is not having the necessary and complete information to include in their tax return.

This position is endorsed by the Australian Institute of Quantity Surveyors and National Tax and Accountants' Association.

If a site inspection is not conducted

The AIQS strongly recommends a physical site inspection. If a site inspection is not conducted, the quantity surveyor must provide a written statement detailing the reasons why not. Before opting out of having a site inspection, investors must be made aware of the risks of opting out, and this must be acknowledged and confirmed by the client. You can read all about it in this white paper produced by AIQS.

site-inspection

Why BMT Tax Depreciation?

Our aim is simply to get your claim as high as we possibly can while maintaining tax office compliance. BMT's average first full financial year claim for residential property is almost $9,000. The current ATO average claim based on latest release data is $3,888.

site-inspection

A site inspection:

Quick complete
Is quick to complete
An inspection takes about 30 minutes
Record assets
Records all assets
All depreciable assets will be counted, measured and photographed
ATO compliant
Ensures ATO compliance
Inspections are completed by BMT specialist staff, not contractors
  • Assessing construction type
  • Noting all building fixtures
  • Noting all plant & equipment assets
  • Noting installation dates of assets
  • Identifying additional works
  • Identifying age of the building, fixtures & assets
  • Taking measurements of rooms
  • Observing the site/yard constraints which could increase the historical construction cost
  • Photographing the building and fixtures and fittings like stoves, air conditioners and hot water systems

Photographs of assets do not include any personally identifiable information, and do not form part of the tax depreciation schedule.

All this information will be used to create a comprehensive tax depreciation schedule which helps to reduce tax liabilities.

We can arrange access to the property either directly with you, or through your property manager. We can organise the inspection to take place either inside or outside of business hours, at another convenient time.

Our site inspectors carry identification and will present it on arrival at the premises.

Blog articles

Contact us

Find out more about depreciation