i invested in this tax year in an ip that is actually a duplex style place with a new (reasonably) half and an ‘old’ half… i dont have any records of when and how much…. so i was wondering what you guys thought with regards to a quantitive surveyors report, how much do they cost/ are they deductable/ is it a good move???[grad]
and… i was thinking of going to the upcoming reno kings seminar… is this a deduction and what % of the cost can ou get back….? Can anyone tell me their experience with the reno kings???[party]
another word on deductions – things like books/ computer programs if related are also deductions???
hope you all are having a happy Easter…
and dont eat too much chocolate[puke]Hi Taz,
Building depreciation comes in a two part deduction.
The first is known as building (or capital depreciation) and provides opportunity for the investor to claim a deduction of 2.5%/annum of the construction cost (as distinct from purchase price) for the 40 year depreciable life of the property. To qualify the building construction need to commence after September 16, 1987.
As an aside any building that commenced in the period 18 July, 1985 – 15th Sept 1987 is eligible for a 25 year 4% building or capital depreciation claim.
You may also find the building underwent significant renovations and these too may be eligible for depreciation claims.
For this reason it is essential you accurately determine the recognised date that construction commenced. Shire/electricity or water records may be of assistance. Also endeavour to find out if (when) any renovations were made.
Additionally plant and equipment (loosely described as not the walls, floor and ceilings) also have a start up value at time of purchase and will be depreciated over an ATO approved lifetime. The length of life and the depreciation rate varies considerably between items.
The costs are deductible and do vary from company to company. You will also find some companies are more able/willing to travel to inspect properties. I suggest you give some a call to see what they offer – a good company will also be able to tell you whether or not it is worth your time and $ getting a report done.
Scott (depreciator) will add some clarity to your questions as he is an expert in the field. Probably on holidays at the moment.
Whether or not the item mentioned are deductible will be determined by your accountant. If they are considered self-education then you will miss out – however if the resources are considered integral to your business then they may be deductible – Julia will be able to give a definitive answer.
Derek
[email protected]Read my comments? Think I can help you? PM or email me.
Yes Yes Yes, get a report done.
To date, I’ve also found it worth the cost.
Hi Taz,
I reckon Derek covered most of what I would have said. A note on Structural Improvements (renovations) – they can be depreciated if they were carried out after February 26, 1992. This can include exterior work, too – driveways etc. Getting a date on improvements made by a previous owner can be tricky.
The cost of getting a Tax Depreciation Schedule is 100% deductible in the year you pay for it. That’s why we get lots of people paying in June. As for whether it’s worthwhile, it depends on the property and your tax situation. We have a guarantee that if we can’t find more deprciation in the first full year of the schedule than our fee, we’ll give you the schedule and refund your money. Having said that, we’ve only given away about 6 schedules in 3 years – my guys are pretty good at working out over the phone whether it’s worthwhile getting a schedule.
Costs will vary depending on where your property is. I’ve got 70 Quantity Surveyors around the country in most places where people are buying properties, so feel free to call – 1300 660033. If it’s Kalgoorlie, Mt Isa or Broken Hill, though, forget it. We can get there, but travel costs are a killer. There often isn’t much depreciation in the properties people are buying in these places, either.
Re: The Reno Kings. I’ve seen their seminar material and it’s pretty good – lots of practical advice. I’ve also met both the guys and they seem decent – they’re not your typical seminar presenters. Of course, to make what they advocate work you do need to be able to acquire property at the right price, and I’d say that’s getting tougher these days.
ScottHi Taz,
Scott said “Of course, to make what they advocate work you do need to be able to acquire property at the right price, and I’d say that’s getting tougher these days.”
I would add and ensure you do not overcapitalise for the local area – no doubt this is a key message in the seminar.
Derek
[email protected]Read my comments? Think I can help you? PM or email me.
Re: the Reno Kings. From what I recall one key to their method of adding value is being able to reconfigure a house and find an extra bedroom, or bung a deck on and add some french doors. It’s easier to do this with ‘queenslanders’ i.e. timber houses. So if you live in, say, Sydney where housing stock tends to be of brick construction, you may find some of their tactics a bit too expensive.
There is still lots of other useful advice on adding value, though.
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