Hi all,
One area of investing I have never learned much about is depreciation. All of my properties are older house and can not as far as I know be claimed for depreciation.
But what about the chattles. eg the dishwasher.
Does anyone know much about this and would like to share their knowledge? I think that just by claiming some depreciation on alarm systems, dishwashers and carpets ect I could actually push my slightly negative cashflow house into a positive one.[exhappy]
Do you just pay a quantity surveyor to set up a depreciation scheduale and thats it. You can claim the depreciation on TAX?
Any comments would be great
You will always miss 100% of the shots you don’t take!
Thats it. Just get a QS in!
He writes a report and you claim it each year.
Cheers,
Simon Macks
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.
Yes, you should be able to claim for those things and more. In fact, you may be able to back claim for the last 4 years.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
Click below to email meTerryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Goods and Chattles went to being called Fixtures and Fittings and now they’re Depreciating Assets.
Who knows why.
Depreciation on the Assets is just another outgoing i.e. cost you can claim. It’s no different from other outgoings: interest payments, management fees, rates etc.
In a pre 85 built unrenovated property, the only depreciation available is in the Assets.
A QS (like us) will charge you a fee to prepare a report. The issue will be whether there is sufficient depreciation able to be claimed to justify the fee. Our schedules runs for 20 years and we have a guarantee that you will get more than our fee in the first full year of the schedule or we’ll refund the fee. Having said that, if we don’t think it’s worth the exercise, we won’t proceed – no point mucking tenants and property managers around unecessarily.
You are able to ‘self assess’ the value of assets (but not the value of building work). It’s not too hard, but I’d need to explain it over the phone.
We also now have a service for unrenovated pre 85 properties where we can put together a schedule at a reduced fee if you can privide sufficient information – photo survey, rough floor plan etc.
Depreciation is a non cash deduction i.e. it’s just sitting there waiting for you to claim it. So you might as well do everything you can to do that.
ScottTax Depreciation Schedules
Australia wide service
1300 660033
[email protected]
http://www.depreciator.com.auOriginally posted by depreciator:Our schedules runs for 20 years
Hi Scott,
Just curious – How does your report address other remaining 20 years (assuming new property) building depreciation in the report?
I assume you have a statement along the lines for years 21-40 the owner is entitled to claim $X/annum as building depreciation.
Derek
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0409 882 958
Property investment advice and researched property in quality locations available.Thanks guys for your responses so far. Looks like I’m not the only on addicted to this site.[confused2]
So let me get this straight! I can estimate the value of things like alarm systmes and dishwashers ect? What sort of percentage can you claim on these sort of items and how do I find this out?
I have a house I have rented out for over 6 year and never claimed depreciation. Can this be backdated?If I have just purchased a house and don’t know much about the items in question eg dishwasher age and value then how do I go about valuing it?
You will always miss 100% of the shots you don’t take!
Hi Derek,
I doubt whether anybody will use one of our schedules for even 20 years, let alone need one that runs for 40 years.
(And it would probably only be depreciation on the building that keeps running anyway, and that’s a straight 2.5% per year so Year 39 will be the same as Year 2 if the property is brand new.)
When we started doing tax work only, we used to do 5 year reports as this was the average length of time people held a property before selling, or held a property before making changes.
Then somebody started doing 10 year reports. Then 20 year reports. Now there is even one company that advertises ‘lifetime schedules’, which is just a silly marketing spin that made me laugh when I saw it.
When changes are made to a property, the existing schedule to an extent becomes redundant.
realistically, it’s hard to imagine a rental property surviving for longer than 20 years without needing some work e.g. a new kitchen.
We’re about to launch an online facility for clients of ours for whom we have done a schedule in the past. If they have made changes to their property, they will be able to input the data on-line and generate a new schedule. A new schedule will also go to their accountant simultaneously. The cost will be around $60, which will probably be cheaper than what their accountant would charge to fiddle with an existing schedule.
I’d be interested in feedback on this service.
ScottTax Depreciation Schedules
Australia wide service
1300 660033
[email protected]
http://www.depreciator.com.auTo answer your questions Ronulas:
Yes, you can estimate (self-assess) the value of things like alarm systems and dishwashers ect?
All Depreciating Assets have an Effective Life determined by the ATO. This life dictates their depreciation rate. You’ll find this on the ATO site – good luck with the search.
If the opening value of an Asset is under $300 it can be claimed immediately in full. If the opening written down value at the commencement of the Schedule is between $300 and $1,000, it goes into the Low Value Pool as a Low Cost Asset. If the value starts out over $1,000 and then falls below this, it enters the Pool as a Low Value Asset.
The Pool depreciates at 18.75% in the first year and then 37.5% per year after that.
It is easy to lodge amended assessments going back 4 years. Each year is amended. Going back past 4 years is tougher.
It’s time to get an accountant, Ronulas.
Re: Self assessing the value of items in the place you have just bought, I said in my previous post it would be better to discuss this over the phone. I reckon you should avail yourself of this offer.
ScottTax Depreciation Schedules
Australia wide service
1300 660033
[email protected]
http://www.depreciator.com.auRonulas
I asked a simular question not long ago and was put on to this address
http://www.ato.gov.au/individuals/content.asp?doc=/content/42782.htm
This explained everything that i needed to now, give it a try, i learnt a hell of a lot from it.
Ty
Go hard or go home
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