Tax depreciation schedule with Deppro, is it necessary?

Basically Deppro and other quantity surveyors assign a cost to various assets in the property, so you can claim a deduction for the depreciation of these items against the rental income.

It usually is more beneficial for newer buildings, as you can claim a 2.5% capital allowance (depreciation) against the building cost over 40 years frome date of construction.

For an older house, it depends on the assets in the house, such as oven, air conditioning, carpets, blinds, etc. Generally, depending on the age and value of the above assets, it's a good idea and well worth it.

I heard on the Margaret Lomas show Your money your Call that she used BMT tax depreciation, and if you call them they give you advise for free, and then same thing let you know whether or not its worth while going through with it, and if it is, then you can pay them….

advice not advise

Ricky,

If the property is pre 1985 and not really had any work done to it, then it’s not worth getting a depreciation schedule done for the building.

You can’t work out the costs of a building costs for capital allowance.
However, you are allowed to come up with your own value for depreciable assets.
I have a couple of pre 85 investment properties where I’ve worked out my own value and remaining life of the assets. After doing this just ask the accountant if the values appear reasonable. Just use the Rental Property guide on the ATO website as a guide for what you can claim and expected life of assets. http://www.ato.gov.au/content/downloads/IND00237831N17290610.pdf

Having said that I do use a QS for other properties, built in 1990’s or older properties where there has been renovations done

Jamie,
You obviously did not read the entire post or understand the post. I was not saying do not claim depreciation, I’m saying that there may be circumstances where there may be no need to commission a QS to do it for you.

I still claim depreciation on pre 85 properties. I have a pre 85 IP that I settled 2 weeks before the end of a financial year. I claimed approx $2500 in depreciation and low value pool deductions that I calculated myself.

There are 2 part to a depreciation schedule
1) the building, claimed as Capital Works Deduction. You cannot work this out yourself, a QS must do it.
2) the depreciable assets, claimed as Decline in Value Deductions. You can work this out yourself and do not require a QS.

If the building is old and not really been renovated then there is nothing really for the QS to do, and a good QS will tell you it’s not worth doing.
What a QS will do is value the depreciable assets, carpet, blinds, air con, white goods, exhaust fans, floating floors etc (which I’m saying you can do yourself).
A QS can pretty much guarantee that there will be enough deductions in the first year to cover the fee, as anything less that $300 can be written off 100%. And the use of Diminishing value method over Prime Cost method of depreciation usually makes a big difference in the 1st year.

When you buy a new asset for your 1950’s property, do you go back to the QS to add it you your schedule and write off the old asset.
No (well I hope not), you just add it yourself or get your accountant to do it. Why?, because you can. Cost $0

A good exercise is to try and do a valuation and estimated remaining life yourself (use the list of assets in the tax guide as basis), when your QS does it , see how close you were. Most people would not be out by too much.

No worries Jamie,

The reply just made it sound like a person would miss out on that deduction if they didn’t pay to have the report done.

I was just trying to make it clear that there is is an alternate to QS doing it for you, $200 is good, however some QS’s will charge $500 for the same service.

Cheers