PARTNER FEATURE

Claiming tax depreciation deductions on investment property has become an important part of a property investing strategy.

Many investment property owners remain unaware of the benefits that tax depreciation provides. There are usually thousands of dollars to be claimed in depreciation deductions on any investment property.

What is Tax Depreciation?

As a building gets older and items within it wear out, they depreciate in value. The ATO allows property investors to claim a deduction related to the building and the plant and equipment items within it. This can be claimed by any owner of an income producing property. This deduction essentially reduces the investment property owner's taxable income – they pay less tax!  In order to claim deductions for property depreciation a tax depreciation report should be obtained for each income-producing building.

Why use a quantity surveyor?

Quantity Surveyors are one of the few professionals recognised by the Australian Tax Office to have the appropriate construction costing skills to calculate the cost of items for the purposes of depreciation. BMT also prepares cost plan estimates for all types of buildings. This ensures they have the complex skills and data required to accurately estimate construction costs. Construction costs are estimated in today’s market and historically written-down to the year of construction using yearly cost indices.  By using a team of quantity surveyors, like BMT Tax Depreciation, who specialise in property tax depreciation, you can have peace of mind that you are getting a depreciation report that maximises your deductions.

 

The Advantages of using BMT Tax Depreciation for your Depreciation Schedule

BMT Tax Depreciation say :

1. BMT Tax Depreciation will discuss any property scenario, free of charge and obligation-free.

2. If they inspect the property and believe that it is not worth completing a depreciation report, they will not charge you for their services to that point.

3. If they can't obtain double their fee worth of deductions in the first full financial year claim, there will be no charge for their services.

 

 

 

What is a BMT Tax Depreciation Report?

 

BMT Tax Depreciation will:

1. Visit the site and carry out a detailed inspection of the property including identifying, measuring and costing items/plant,

2. Compile the necessary detailed records and photographs for future substantiation of the claim with the Australian Tax Office (ATO), observing Tax Ruling TR 97/25, and

3. Examine all available documents associated with the property; determine the extent of their usefulness for the purpose of the claim, and have the report completed within 7-10 days after the site inspection.

 

 

The BMT Tax Depreciation Website

BMT Tax Depreciation website provides loads of useful information, free of charge:

1. It has easy to understand explanations of what depreciation is, how it is calculated and what types of things can be claimed.

2. It offers an online depreciation calculator that will help assist you in determining the likely levels of depreciation available for a particular property

3. It describes exactly what is in a BMT Tax Depreciation report and what types of methods are used

4. It describes in good detail what must be considered if you are planning to renovate an investment property as well as guidance on what can be claimed and not claimed.

5. It explains why a Tax Depreciation report is needed for taxation purposes on investment property, rather than other forms of costing listings, and what situations can be covered by a Tax Depreciation report.

 

If you are a RenoSave Card Holder you can also have a generous RenoSave Card Discount with BMT Tax Depreciation! 

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Are you intrigued and want to read more?  Read On...


How much depreciation can I claim?
Depreciation amounts depend greatly on the type of building, its age and the fixtures and fittings identified. Generally, the newer the property, the more deductions there are to be claimed. However, older properties can still obtain deductions.

It is worth enquiring about any property - even one that is 100 years old! Although current tax legislation states that any residential property built before 18 July 1985 cannot claim the capital works (building costs) allowance as a deduction, if any extensions or renovations were completed after 1985, they will attract the capital works allowance.

Additionally, a tax depreciation report covers not only the capital works allowance but depreciation of plant and equipment as well. This means that all properties that obtain an income by the way of rent should be eligible to claim a deduction for the plant and equipment items contained within the property.

Many plant and equipment items contained within a property are able to be depreciated.  Some of these items include:  Hot water services , Ovens,  Vinyl , Ceiling fans , Floating timber Floors, Furniture packages , Dishwashers , Range hoods , Clothes dryers, Carpet , Smoke alarms , Freestanding spas, Blinds, Air conditioners, Curtains, Exhaust fans, Light shades, Security systems, Washing machines , Microwaves, Cook tops.

Tax Depreciation and Renovation
Many investors purchase properties that require improvement. They usually do this with the sole purpose of renovating to create equity and generate extra rent. Once you have decided to renovate your investment property, it is important to ensure you obtain the best long term value from the money you are outlaying. Renovations can be expensive, so it makes financial sense to obtain the maximum depreciation benefit where possible. When it comes to deciding which new item to install in a property,some consideration should be applied to the depreciation potential of the alternative
item/s. Thinking about the types of new fittings and fixtures before you install them may generate you thousands of dollars in depreciation deductions.

 

 

The BMT Difference

"As quantity surveyors in a competitive market place, it is imperative that BMT stays ahead of competitors through constant innovation and a focus on continually improving our systems and people. It is this, along with our customer service excellence and national service coverage, which makes BMT one of the fastest growing and most successful Quantity Surveyors in the Australian marketplace today.
In the past 13 years we have completed over 130,000 jobs for investors across Australia. We separate ourselves from our competitors in a number of ways. Key BMT points of difference include:

BMT Tax Depreciation frequently liaises with the ATO to utilise current legislation to our clients’ advantage.

Double our Fee or it's Free: Guaranteed – our clients will receive at least double our fee worth of deductions in the first full financial year claim, or there will be no charge for our services.

BMT Tax Depreciation takes a personalised approach to each report to ensure quality.

We do not jeopardise quality in order to offer a cheaper fee.

BMT Tax Depreciation specialises in just that – Tax Depreciation! This enables us to concentrate on maximising each investors claim.

We apportion relevant preliminaries and consultants fees. These can be attributed to items of plant and equipment giving them a higher depreciable value and more tax deductions for our clients.

Our site inspectors are fully trained depreciation specialists – we use BMT staff only, not contractors, which is important in the event of an ATO audit.

BMT reports show projected depreciation for 40 years, the life of the property.

Every report shows detailed calculations (not just a summary) for 10 years which helps accountants easily update reports with replaced assets in later years.

We include additional works or additional plant and equipment – which saves on accounting fees.

Our turnaround time is guaranteed 7 working days after inspection.

We gather needed information from councils and relevant authorities.

The report is tailored to the client’s individual scenario, settlement date and purchase price.

The report is structured to recoup missed deductions – clients can go back and amend their claim."

 

Material sourced from the BMT Tax Depreciation web site, with thanks.