Commonly missed deductions

Depreciation is a complex area, so unless you’re a specialist Quantity Surveyor or a qualified Tax Accountant, it can be hard to wrap your head around it.

As such, investors miss deductions all the time, meaning they could be losing out on thousands of dollars.

Research shows that 80% of property investors are failing to maximise the deductions claimed from property depreciation.

So why are so many investors missing out and what deductions commonly go missed?

Why are deductions missed?

There are a few reasons why deductions may be missed or not maximised.

  • The first is that many investors remain unaware of depreciation and that it’s even a valid claim. This is possibly because it is a non-cash deduction, meaning the investor does not need to spend any money in order to make a claim. Furthermore, they may not realise the significant deductions available and may falsely consider it a minor claim not worth their time.
  • They may not be getting a specialist to prepare a tax depreciation schedule. Quantity Surveyors are one of a few professionals recognised by legislation (Tax Ruling 97/25) to have the appropriate construction costing skills to calculate building costs for capital allowance claims. You should ensure you seek the services of a Quantity Surveyor who specialises in property depreciation to ensure claims are maximised. A specialist will have up to date knowledge of legalisation and the tools and tricks available to maximise deductions in a legally compliant manner. They will also ensure that no asset goes unaccounted for.
  • Many investors are unaware that they can make a claim for renovations completed by a previous owner. So long as they fall within the qualifying date for capital works, these previously completed renovations are a valid claim and can provide significant deductions for current owners.
  • Unusual or small items often go overlooked. Even if they’re aware of depreciation, many investors don’t realise that things as simple as door stoppers, shower curtains and spa bath pumps can attract a depreciation claim. While they may seem small, these items can really add up in a depreciation claim.
  • Some investors will choose to make a self-assed claim. This is risky for a variety of reasons. Many investors do not have the technical knowledge of a trained professional and as such, they can overlook important items or make an incorrect claim, which may mean it is not compliant and puts them at risk in the event of an ATO audit. It’s always best to get an expert on board to prepare your tax depreciation schedule.

What assets are commonly missed?

As previously mentioned, renovations made by previous owners are commonly missed. Speaking of renovations, if an investor is currently completing a renovation, they may be eligible to scrap any assets they’re getting rid of in the renovation. This means they can claim the remaining depreciable value for certain assets. This can be commonly missed if a specialist Quantity Surveyor has not provided assistance.

Furthermore, a Quantity Surveyor will know how to make use of different strategies and tools to maximise deductions sooner, such as the low value pool. If this is overlooked, it can result in valuable deductions going unclaimed.

Finally, small or unusual items are often overlooked, deemed too insignificant by investors to warrant making a claim.

Some examples include:

  • Garbage bins
  • Door closers
  • Rugs
  • Smoke alarms
  • Exhaust fans
  • Electric clocks
  • Freestanding bathroom accessories
  • Shower curtains
  • Spa bath pumps
  • Garbage disposal units
  • Tennis court nets
  • Automatic window shutters
  • Freestanding garden sheds
  • Intercom system
  • Electric water filters
  • Ceiling fans
  • Solar garden lights
  • CCTV systems
  • Water feature pumps; just to name a few

These deductions may seem small, but they do add up for property investors and should not be overlooked.

What’s the solution?

When it comes to property depreciation, it’s always best to employ the services of a Quantity Surveyor that specialises in tax depreciation, such as BMT, to prepare a tax depreciation schedule for your investment property.

This will not only ensure that these deductions are not missed, but that deductions for all qualifying assets are maximised and compliant with ATO legislation.

This schedule will cover the life of the property, can be easily used by your Accountant when preparing your tax returns and will ensure that these commonly missed deductions will not go unnoticed.

Article provided by BMT Tax Depreciation.

Bradley Beer (B. Con. Mgt, AAIQS, MRICS, AVAA) is the Chief Executive Officer of BMT Tax Depreciation.
Please contact 1300 728 726 or visit 
www.bmtqs.com.au for an Australia-wide service.

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Honouring our Customer Commitments

We are now on the downward stretch to the end of the year and with this will come lots of festivities and excitement. Also looming is the new years resolution – the commitment for the year ahead! When we make a commitment, we do so with a clear mind on what the outcomes of that commitment will be – we are investing ourselves to the expected outcomes. 

We should consider this with all of our customer transactions and ensure that we are honouring our customer commitments.

  • Discuss and agree on Service Level Agreements – an example of this would be around communication, whether it be online communication, phone communication or email – an agreement  to manage the expectation on response from both parties should be discussed to avoid disappoint or frustrations. It is easy for simple queries to escalate if they are not managed within an agreed upon time frame.
  • Management of funds – Helping your landlords and tenants understand their financial commitments to each other and how you will assist in ensuring a smooth transition to honour your obligations as the agent will help to minimise any stress. Discussing options for payments by the tenant and also the options available for the landlord, how the disbursements are managed for maintenance and utilities and any flexibility you offer in disbursing the landlord funds will show you are engaged with the importance of this function.
  • Data driven decisions – no matter what decision we are making in todays world we look for data to help us, help us compare, help us assess and ultimately to help us decide. So being on the front foot and having data readily available to share to your customers through your marketing channels will help them feel reassured in their decisions. Regularly sharing success stories to your existing clients helps for them to feel secure and comfortable and will also give you great selling tools for attracting new business.

Most importantly, remembering that any decision to invest in a commitment is done so in good faith so the more you can put in place to ensure that you make this a positive experience and show that you have considered the clients needs, will build trust and minimise stress on the partnership.

If you take a small amount of time to find solutions and highlight how this sets you apart you will be confident in the service you can deliver.

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Are you clocking the lifetime value of your Customers?

In a world where everything is tracked, from our time of phone calls to spending habits and even the number of daily steps to monitor our fitness levels; there’s a vast collection of information recorded daily that contributes to our digital scores.

Many companies that you interact with, both on a business and personal level, are right now allocating you a score based on your Customer Lifetime Value and are tracking your activity and rewarding you in line with this activity.

If you were to think about the tracking of your customers, are you putting them to the Customer Lifetime Value test? How are your tracking their worth to your business and as such rewarding them for their loyalty?

If we were to look at it on the level of your Property Management customers, think about ways in which we can build their Customer Lifetime Value, to increase our rates of customer retention and keep them coming back into your business as well as referring others to do the same.

Some of the areas that you might like to begin to analyse are around the areas of communication and personalisation. Communication and the right type of communication is the most important tool in building loyalty to your business, now more than ever before. Delivering on your promises and transparency are key is developing trust in your brand as well as serviced tailored to the needs of the customer.

In terms of finding out how you can personalise service to the client, ask. Ask them what they want in a Property Management company, how often they would like to be paid, how they would like to be communicated with and even how they would like to be notified and budgets around repairs and maintenance. Work with them through their investment journey and communicate the importance of this with them to build a partnership that in turn leads to loyalty.

Another area to consider is the exclusivity of being part of your brand. How do they feel when they walk through the doors of your office, whether that be through the physical front doors or through various communication mediums? Do they feel like a valued member of your community or just another number? Is there a reward for their long-term loyalty to your business?

What makes your customers choose you and are there strategies in place to ensure that should they exit, there is a path for re-engagement at some point in the future to build in a long-term strategy for retention.

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Zero to Hero – How to onboard a new BD

I am often called into a business to coach a recently recruited Business Development team member.

Whilst there is certainly a framework of items that need to be ticked off the list for any recruit in their first three months, the individual program should be tailored to suit both the business and the individual.

Here are some crucial things to consider if you are looking to on-board a BD in your office, or if you are the New BD:

  1. Assess the overall knowledge of the BD in relation to grass roots property management. To sell a PM service, a thorough of understanding of Property Management is crucial.
  2. Once you are confident the BD understands PM, they then need to understand how and what is delivered to your clients by your PM team. The most important aspect is gaining an understanding of the benefits you provide to your clients in every aspect of what you do.
  3. Becoming the “Market” expert. Your BD needs to understand local market stats, trends and key talking points that effect rental property in the area. It is also important to be able to demonstrate the success of your team above these market averages.
  4. A BD role is essentially a “Sales” role within PM, crafting a skilled and thorough Listing Pitch is a key ingredient to success – always be learning, training and improving skills around selling the service & closing deals.
  5. Consider the initial targets and build in some lead in time. What represents a realistic target for months 1, 2 & 3 will be determined by recent business growth and the new BD’s experience & skill level. Setting unrealistic targets for the first quarter in the business is often a de-motivator, so make sure a realistic target is set.

The above just skim the surface of how to best position a new BD for success in any organisation. If you would like a tailored training plan to suit your business, get in touch with the Real+ New Business team today team@realplus.com.au

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Training Plan

We are racing towards the end of the year, so now is the time to start your planning. And training should be at the top of the list.

Not sure where to start? Let’s take a look at the steps you can put in place to create a training plan for your office:

  1. What’s your budget?
    Set an office or team budget that can be used towards a variety of training for the PM team. Training that involves the whole team, like a Real+ Membership and ARPM are important for consistency across the team. In addition to a team budget, perhaps you could also set individual budgets. Have an annual review with your team members and find out what’s important to them and where they’d like to develop (this is also a great recruitment tool). This allows your team to take ownership of their learning and development. You can help tailor this to their skill level as well.
  2. Plan ahead
    Map out your annual training calendar and plan the schedule across the year. This will allow you to structure the training in a way that will flow allowing for natural progression. Involve the whole team and ensure that everyone has access to this calendar.
  3. Do they want to learn more?
    Often, we hear the statement, “I’ve been in the industry for a long time, I don’t need help”. Instead of making training mandatory, make it something that people don’t want to miss out on. Training should be about improvement, achievement and progress, no matter what your experience level. So make your training fun and varied.
  4. Outcomes are important
    We have all been to a training session before, listed a heap of great ideas, only to let them sit at the bottom of the in-tray because we are too busy to implement. It’s not about implementing everything at once, so choose one or two quick wins, and then perhaps delegate your wish list to someone who does have the time to plan and implement.

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