I have a few questions regarding my tax refund,
I went to see an accountant about 2 weeks ago and my situation is as follows,
I built a brand new investment property which was completed in dec 05 the house never had tennants in until feb but they are still there now, I asked my accountant about depreciation on the property as he would only calculate depreciation on items which i have added to the house since the tennants have moved in eg:- Air con, security screens, and a few other smaller items. Is this the way the system works??? i also asked him if i should get a depreciation report done on the property and he said he had never heard of this????????….I am no Guru with numbers and tax law but i was of the understanding that with a new IP depreciation could be claimed on alot more items.
Please adviseThanks
NathanYou can depreciate items that are used in producing an income, even items that are owned before the production on income. If he has never heard of a depreciation schedule, then he can’t be very knowledgeable about taxation, so you may be missing out on more deductions. ie his/her ignorance may be costing you money.
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Change accountant quickly
Get a proper depreciation schedule done by a quantity surveyor, as accountants quite often are conservative, due to the tax department not recognising them as suitably qualified to assess all items.
For example an accountant can not estimate depreciation for construction costs.
If a construction – builder will supply one, but it is normally based on simple cost, not real cost.
You will get a lot more using a quantity surveyor.
One of the better ones is BMT & Assoc – http://www.bmtqs.com.au
I will also add for others – the building does not have to be new, it can be as old as 40 years. BMT will also advise whether they think it is worth it before they agree to do it, but ask them to do that anyway.
Regards
JohnInspired Finance
(02) 9944 7776OK thanks guys
so what can be claimed as a depriciable item and what cant?contact Scott at http://www.depreciator.com.au
He is a hell of a nice fellow and will explain it all over the phone at no charge.
He will even tell you if a report is worth doing or not – but I bet it is!
I agree with the others – you need a new accountant. I cannot believe that any exist that have never heard of a depreciation schedule.
Simon Macks
Residential and Commercial Finance Broker
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0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Hi Nathan,
That’s a pretty bizarre thing for an accountant to say. Lots of them still make up figures for depreciation (despite the ATO directives to them), but I have never heard of one who didn’t know abiut depreciation.
Do you still have the contract you had with the builder? If I can see it I’ll be able to tell pretty accurately what depreciation you’re entitled to.
ScottTax Depreciation Schedules
Australia wide service
1300 660033
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http://www.depreciator.com.auHi Nathan,
I just read a book called “Rental Property and Taxation” by Tony Compton. It’s an easy to read guide about what is claimable, what you can depreciate, the actual process of depreciation, CGT etc. I still wouldn’t do my own tax, but I’m more confidant about talking to the experts now.
Lena [happy3]
The ATO Rental Properties Guide is also pretty good.
ScottTax Depreciation Schedules
Australia wide service
1300 660033
[email protected]
http://www.depreciator.com.aui dont know whether to laugh or get angry. i’d be changing accountants right away, when mentioning to him you have an investment property he should of asked if you had a depreciation schedule done, and if in your case (you didn’t) the accountant should of advised you to get one!
I have heard there is legislation that allows the ATO to tax your CG’s like you depreciated the property whether you did or not. Has anyone heard of this? I’m still a youngin so if there are any accountants out there please correct me if anything i said is wrong.
Hi nstellar,
It’s funny that I stumbled across this topic because I just had my first appointment with my Accountant today and the first thing he had advised was that I can claim depreciation tax & should get an appreciation schedule done. So you should drop the goose Accountant you have appointed heha because either he is not knowlegable or just plain lazy.
Below is a list of things you may claim which was provided by my Accountant today. Please note that some may not be applicable to you.
[Question] My Accoutant said you could pay a Quantity Surveyor to do the work for you and may cost from 350 – 500. Do these figures sound about right to anybody?[blush2]
Advertising for tenant
Bank Charge
Body corporate fees
Cleaning
Council rates
Electricity & gas
Garden & lawn mowing
In house audio/video service charges
Insurance
Building
Contents-landlords etc
Public liability
Interest on loans
Land tax
Legal Expenses
Lease costs
Preparation
Registration
Stamp duty
Mortgage discharge expenses
Pest control
Property agent’s fees & comission
Quantity Surveyors fees
Repair & Maintenance
Secretarial & book keeping fees
Security patrol fees
Servicing costs i.e. servicing a water heater
Staionary, postage
Telephone calls and rental
Tax -related expenses
Travel & car expenses
rent collection
inspection of property
Maintenance of property
Water chargesAn average would be $600 -700 these days. Depending on the property and the location.
I do know a firm who will do report based on photos if you have an IP in a remote locality.
Cheers
Simon Macks
Residential and Commercial Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
The ATO previously reduced the cost base by 2.5% per year whether or not you claimed it, if it was applicable. But they have recently come to sense and if you haven’t claimed it due to not having sufficient information to base a claim then it won’t reduce your cost base. If you haven’t claimed it, but are eligible to then I would suggest that you have your past returns amended where possible, to include the building write off (usually 2.5%), as this can be a significant booster to your refunds.
With regard to the accountant not knowing what a depreciation report is, I would say that they obviously haven’t had much to do with investment property tax returns, and so not much experience at all.
Start shopping around to find someone who will suit what your needs and expectations are, as it will prove to be a very sound investment if you get an accountant who is both knowledgable and also interested in your situation.
Originally posted by Mortgage Hunter:An average would be $600 -700 these days. Depending on the property and the location.
I do know a firm who will do report based on photos if you have an IP in a remote locality.
Cheers
Simon Macks
Residential and Commercial Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Thanks Mortgage Hunter,
Do the Quantity Surveyors estimate construction costs as well as estimating costs for plant and equipment items all in one go, or are they considered seperate?
I don’t know too much about this but what if I currently have the apartment leased, how would they go about estimating the costs of items in the apartment?
Your knowledge & tips would be most appreciated[thumbsupanim]
Originally posted by Jessica3:Originally posted by Mortgage Hunter:An average would be $600 -700 these days. Depending on the property and the location.
I do know a firm who will do report based on photos if you have an IP in a remote locality.
Cheers
Simon Macks
Residential and Commercial Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Thanks Mortgage Hunter,
Do the Quantity Surveyors estimate construction costs as well as estimating costs for plant and equipment items all in one go, or are they considered seperate?
I don’t know too much about this but what if I currently have the apartment leased, how would they go about estimating the costs of items in the apartment?
Your knowledge & tips would be most appreciated[thumbsupanim]
Happy to help.
The ywill estimate both at the one time though they should use the actual builders cost if available.
If the proeprty is tenanted then they will arrange an appointment through the PM or yourself if privately rented. They do this all the time and are conscious of tenants needs in my experience.
The firm I use has a guarantee that your first year refund will be more than the cost of the report. If it isn’t then they refund the cost and the 20 year report is free. With that level of certainty I can think of no good reason why you wouldn’t get it done.
Cheers,
Simon Macks
Residential and Commercial Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
If this quantity surveyor person will cost you $600(or whatever) can you claim that as a deduction in the next financial year. Like how my parents claim the money they pay the accountant in the next financial year.
So its like a discount.
Hmmm???No – you claim it in the same financial year that yo uspent it. Plus you claim the depreciation figure he gives you.
My latest property was buil;t in 1960 and I was able to claim an additional $3000 I didn’t spend in that year alone. The report lasts for 20 years.
If you have a newer place it can be much higher. A new apartment with a pool, lifts etc can be very high as you get to claim your share of those facilities.
Simon Macks
Residential and Commercial Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Mortgage Hunter you are the Master of IP on this forum, you seem to have solution or answer to everything hahe.
The building is about 4 months old and does have lifts, swimming pool & gym facilities. I will definatley get a report done soon, thanks. If I decide to keep the apartment for just over a year I could claim for the entire refund?
Which firm were you referring to?
Thanks again for your help.
Originally posted by Jessica3:Mortgage Hunter you are the Master of IP on this forum, you seem to have solution or answer to everything hahe.
The building is about 4 months old and does have lifts, swimming pool & gym facilities. I will definatley get a report done soon, thanks. If I decide to keep the apartment for just over a year I could claim for the entire refund?
Which firm were you referring to?
Thanks again for your help.
You must get it done. The first years claim is the biggest as many low value items are written off 100% in this year.
http://www.depreciator.com.au is the mob I use. mention my name to Scotty and he wil llook after you.
Cheers,
Simon Macks
Residential and Commercial Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Thanks very much Simon[evo]
The tax office have a publication that you can download that lists all the expenses and decline in value amounts claimable just go to
http://www.ato.gov.au/content/downloads/NAT1729-06.pdf
This topic is also explained further at http://www.propertydivas.com.auCheers,
Amanda
“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”
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