I am close to purchasing my first investment property and want to ensure that as the property settles, i am receiving the tax benefits immediately.
Will a quantity surveyor do a report for the property i am buying prior to settlement?
Hi PF,
A QS report takes about 6 weeks to prepare – depending where it is. A property in a more remote locality may take a little time to get organised unless you want to pay through the nose for a one off inspection.
In many cases the QS will wait until after settlement as they like to use stamp duty figures etc to assist with their report compilation.
Be worth a phone call or two to see what the company you are using does.The QS report has no immediate impact on your tax benefits unless you use the information to complete a PAYG tax variation in which case you can use the data when completing your form.
If the property is reasonably old then the QS report may realise negligible gains, in which case you may wish to complete the PAYG based on other costs such as interest, rates, etc.
Hi there
The QS can backdate the report – so no need to worry about having it done as soon as you get the keys.
Having said that – it's usually more convenient to have it done before the tenants move in, otherwise you need to coordinate access with a third party involved.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Therefore i can initially estimate the depreciation (after careful calculations) and adjust either throughout the year after receiving the QS report or upon the next financial year?
Yep!
Bear in mind your depreciation report will last for 40 years (or the balance thereof) if it is a new residential property.
Away from the QS report remember you still have to apply to the ATO for a Tax variation and only when you receive their letter can you hand it to your payoffice and get them to adjust to your Tax deduction on your salary.
Isnt going to happen over night.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Maybe a silly question but thought id ask
Does the QS report have to be completed before this FY ends?
ie. if i was to organise it now, as someone above said it takes about 6 weeks (so July sometime) could i use this in FY 11 – 12?
Cheers
Yes you can – the QS report generally covers a 40 year timeframe of the balance thereof.
In your case don't submit your tax return until you have your QS report.
If you have previously submitted a tax return without a QS report get your accountant to amend your previous returns. You have two years (from date of submission) to make any amendments to a previously submitted tax return.
Ok great.
Thanks for the advise Derek!
Hi All,
Most Quantity Surveyors are able to conduct the inspection prior to settlement but the report won't be finalised until settlement has occurred. If you settle before the end of this financial year make sure you get the report organised so you can claim some depreciation immediately.
Remember, if you pay for the report before June 30 you can claim the fee in this years tax return. You're also able to lodge a PAYG weekly tax variation through your Accountant. The majority of large depreciation schedule providers only take a couple of weeks to turn a report around.
I have just enlisted "Depreciator" to create my 3rd depreciation schedule for me, they do a fine job as far as I am concerned, some people may think they are expensive, but I have seen cheaper reports, and some of them are just down right useless. I know how to read the ones Depreciator give me so I stick with them.
They usually get the schedules done in just a few weeks, and they send you reminder emails to make payment before the end of FY so that you can claim it straight away. Whilst you need to wait for the schedule to DO your tax, you only need to make payment fore the schedule by 30 June to claim its cost at tax time, so I wouldn't stress about trying to get it done quickly just go with a company that will ensure your payment is complete by the EOFY.
Adrian, just a side note. By the sounds of it, it seems that the purchase you are considering is heavily reliant on getting the QS report done to give you the cash flow you need to maintain the property???
If this is a concern, then the property you are looking at might not be ideal for your situation.
The old saying applies with property as with business, “Cash flow is King” so just make sure you’re not over committing and hoping the tax deductions will be your saviour.
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