Claim depreciation deductions this financial year

With tax time approaching, Property Managers should be encouraging their investor clients to claim all available deductions for their investment properties, including property depreciation.

Depreciation is considered a non-cash deduction, meaning an investor doesn’t need to spend any money to be eligible to make a claim. Therefore, it’s not unusual for these deductions to get missed.

The Australian Taxation Office (ATO) allows owners of income-producing properties to claim depreciation deductions for the natural wear and tear that occurs to a building and its assets over time.

Depreciation deductions relating to the building’s structure can be claimed as a capital works (division 43). As a general rule, owners of residential homes in which construction commenced after the 15th of September 1987 and commercial properties in which construction commenced after 20th July 1982 are eligible to claim capital works deductions.

Plant and equipment assets refer to the easily removable fixtures and fittings within the building such as hot water systems, carpets and blinds. Deductions for these assets are based on the condition, quality and individual effective life of each item as set by the ATO.

Investors should engage a specialist Quantity Surveyor such as BMT Tax Depreciation to discuss the depreciation potential of any investment property they own or are planning to purchase.

BMT can provide a comprehensive depreciation schedule outlining the deductions investors are eligible to claim when completing their annual income tax return.

A BMT Tax Depreciation Schedule has a one-off cost which lasts the life of the property (forty years) and will ensure the owner claims their depreciation entitlements correctly. A depreciation schedule is also 100 per cent tax deductible.

For more information on how depreciation deductions can help your clients, speak with one of the expert team at BMT Tax Depreciation on 1300 728 726.

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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Finding the Connection

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One random Sunday a few weeks ago, I found myself lost in the brightness and colour of my phone waiting for the next hit of dopamine as a notification popped onto my screen and it occurred to me how much more time I spent on my screen compared to actual human interaction.

Rather than greeting the girl at the store who was trying to assist, I vaguely mumbled something that was incoherent. As I sat down and looked up from the haze, I realised I hadn’t even given her the courtesy of a good morning or any form of eye contact. As I looked around at others who were in the same phone-dazed state, it was apparent this had become the norm, which is simply just not ok.

So at what stage did we lose that human connection?

I listen daily to Property Management teams working at the coalface as I help them to work through their challenges. Increasingly, I am hearing, and even experiencing, stories of irrationality, demand and general impatience. As we become more driven by the technology around us, our patience and resilience suffers as we struggle to switch off from the demands. One way our training team help PM’s to tackle this is through education around expectations – setting and re-setting along the way.

I recently came across the following quote:

“Even humans perform better if you switch them off and on again.”

So I challenge you to unplug and switch off, if only for a little while, and try and reconnect with those around you. There can be far greater beauty right in front of you than on your Instagram feed.

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Fully Furnished Fury

With the amount of time and effort that goes into a fully furnished property; the inventory lists, the often short-term tenants and the noise complaints of those holiday lets, are you charging the right amount to cover all the extra hours of work?

 When taking on new business, weighing up the time and admin costs versus the income stream they produce can be the difference between a tidy profit and digging into profits from other parts of your business.

Ensuring you have streamlined procedures for check in and check out, efficient and reliable trades including cleaners and have the landlords in line with your repairs and maintenance policies can all factor into your bottom line.

Detailed inventory lists with quantities, brand, serial numbers, condition,  age and colour as well as supporting photos of each item, can save huge headaches at the end of the lease and ensure a quick vacate procedure with less argument with the tenant about what’s missing and who is responsible for items which are lost or broken.   

On the other hand, having the landlord understand different items shelf life for fair wear and tear can also be of benefit to your service level and your landlords expectations, where linen and sheets may only have a shelf life of 12 months, items such as cutlery may have a shelf life of 7 years.

Remember: not all business is good for business, so ensuring you have the procedures and the staff in place with the ability to take on this type of business could make or break your profit lines.  

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BMT still finding an average of $8,212 in depreciation deductions

Many of Australia’s 2.1 million property investors are still missing out on thousands of dollars in tax deductions each year by failing to maximise or claim depreciation for their rental investments.

While changes to depreciation legislation introduced on the 15th of November 2017, have impacted some investors, there are still thousands of dollars available to be claimed by property investors.

Despite the changes, BMT Tax Depreciation are still finding clients an average of $8,212 in legitimate tax deductions during the 2017-2018 financial year for residential properties. Furthermore, owners of properties directly affected by the legislation changes, i.e. second-hand residential properties where contracts were exchanged after 7.30pm on the 9th of May 2017, still had an average claim of $5,651 in the 2017-2018 financial year.

What do the changes to legislation mean for property investors?

This legislation has been grandfathered, which means if you exchanged contracts prior to 7.30pm on the 9th of May 2017 you will not be affected. However, for those who exchanged contracts on a second-hand residential property after 7:30pm on the 9th May 2017, you will no longer be eligible to claim depreciation deductions on previously used plant and equipment.

What can still be depreciated?

There are still several opportunities available to claim tax depreciation for investment properties.

New houses are still eligible for deductions on plant and equipment, as are properties considered to be substantially renovated by the previous owner.

Plant and equipment assets that have been installed and paid for by you will also continue to be tax depreciable. Other examples where you will still be able to claim deductions for plant and equipment include:

  • Deductions that happen in the course of carrying out a business
  • Deductions for a property held by public unit trusts and managed investment trusts
  • Where the property is held by a corporate tax entity.

All property investors can continue to claim depreciation for qualifying capital works. This is considered to be the building’s structure and any permanently fixed assets such as the walls, roof, doors, tiles and toilets. These deductions make up 85-90 per cent of a total depreciation claim.

Still unsure what these changes will look like for you?

It is essential for property investors to always seek expert guidance on what they can claim to ensure they are not missing out on valuable deductions and risk getting it wrong.

If you would like further information on how these changes may impact you and how simple it is to reap the maximum reward from your investment property, contact the expert team at BMT on 1300 728 726. Alternatively, visit the BMT website to request a quote and discover how the expert team at BMT can help you to find and maximise legitimate tax deductions from your investment property and ultimately increase your cash flow.

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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Preparing for annual leave

Team leave is an inevitable element of leading a team and leave prep can assist in allowing all team members to stay on track during this period.    

Here are a few steps you may like to implement to prepare for leave periods, to help both your stress levels and ensure that the wheels continue to turn in your absence.

  1. Set out-of-office reminders that include details of the leave and who can be contacted for what whilst you’re away.
  2. When planning your routine inspection and review schedules, consider public holidays and potential leave so that these tasks don’t fall on other team members to complete.
  3. Where possible plan out and complete any ingoings, outgoings and bond finalisations before going on leave.
  4. Ensure that your systems are prepared and that your Owners and Tenants are informed of when you are taking annual leave and who they can discuss their properties with in your absence.
  5. If you have access to portals, updates or even an email out to all tenants to educate them on the process of reporting repairs is handy to keep everyone up to date and avoid confusion.
  6. Prepare notes of outstanding items and have a debrief with other team members who will be managing your portfolio in your absence.
  7. Try to relax! You are on leave, so take the time to unplug, unwind and relax so that you come back recharged and ready to tackle the months ahead.

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Real+ – the property management training experts.

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