Forum Replies Created
Regarding depreciation on pre 85 properties.
Everything depends on the quantity and quality of assets inside the property.
If it’s a 2 bedroom, 1950s home with no carpet, no air con and and an original kitchen, it’s unlikely there will be sufficient depreciation to justify paying a QS.
We have a guarantee that if we can’t find more depreciation in the first full year than our fee, we’ll give the Schedule away free.
Having said that, if it’s a house like the one above we’ll recommend against doing a Schedule.
I’d say in the last few years we’ve only given away half a dozen Schedules.
You are allowed to self assess the value of assets in a property. As long as you don’t go crazy, you’ll be okay. It’s building cost that gets tricky and that’s where a QS (or other ‘appropriately qualified person’) is essential.
Give me a call and we’ll have a chat about your property. If you’ve got a reasonable accountant, there’s a chance I’ll be able to help you without you having to spend a cent.
Regards,
Scott – 1300 660033
Rip,
It sounds like you may be entitled to more than your accountant has claimed.
Give me a call and I’ll explain all.
Regards,
Scott – 1300 660033
Knuckles,
A building can be depreciated depending on it’s age.
Renovations carried out by previous owners can also be depreciated. Again, it depends on when they were done.
Give me a call and I’ll explain.
Scott – 1300 660033
Hi Myydral,
Alice Springs is of course one of those tricky ones. I had a QS for a while who worked in both Darwin and Adelaide, so he was able to stop off in Alice Springs occasionally. He’s now based in Adelaide. There is a QS I’ve used in Darwin, but it would cost too much to send him to Alice.There are solutions, though. It depends on the property. I had a long chat with Chan on Friday about his requirements. There are things you can do without spending money on a QS.
Give me a call next week and I may be able to help you.
Scott
Hi Mortgage Adviser,
Head Office is Sydney. I’ve Quantity Surveyors on the ground in Perth (and every capital city + regional areas). 1300 660033 is a local call from anywhere in the state. There are 4 guys at Head Office who just man the phones and keep track of jobs. I’ve got someone else who manages the QSs. Ask to get put through to me.
Regular price is $715 GST inc. Forum member price is $660 GST inc. Plus travel if it’s an out of the way place. Can you get cheaper Schedules? Yep. Will they conform to the latest rules? Maybe.Scott
And now for the other side on valuations…
I had my PPOR valued last week and it came in over what I expected and over a the local agents estimated.
I did a fair bit of preperation for the valuer, but it still took me by surprise.
Scott
Hi KP,
I’ve heard there are some QSs who only touch newly settled properties. Not sure why. It’s nothing to do with any sort of ATO crackdown. Many of the Schedules we do these days are backdated up to 4 years.Gatsby, to take Derek’s point, if the buildings were constructed post July 85 and you haven’t claimed anything on the construction, it’s definitely worth talking to a QS. If they’re older properties, though, and you have been claiming some depreciation on assets chances are it won’t be worth the cost of you getting a Schedule done to claim what you’ve been missing out on.
Best idea is to give me a call Tuesday and we’ll have a chat about it. I’ll be able to tell you whether it’s worth your while getting a Schedule done. Would you be able to send me information on what you’ve been claiming?
[email protected] 1300 660033
Yep, there are some in existing accountancy software packages. The accountants I have spoken to lament that they aren’t comprehensive enough.
And yes, we would envisage use by the general public as well. Of course, we’d have to charge a nominal fee – perhaps $20 per use. This may not be acceptable to the general public.
It’s all part of the research.
Thanks,
Scott
Jaffasoft,
It’s got to be simple enough for me to use. I’ve accepted the fact that computers are probably here to stay, but I have no affinity with them.Derek,
If we end up doing it, I’ll run it past you.I need to work out whether the investment will pay off. Haven’t really worked on the revenue model yet. The aim would be to get it into the accounting fraternity.
Scott
Thanks Monopoly,
I’ll check that one out.
Essentially what the calculator will be is a list of everything conceivable thing that can add to the cost base of a property on aquisition, and everything that can be deducted from the sale price on disposal.
We deal with hundreds (literally) of accountants and none that I’ve contacted have a definitive list.
I’ll bet there are loads of people paying too much CGT because there are things they or their accountants aren’t aware of.
I’ve got a little CGT issue myself so I have a vested personal interest in finding every possible thing that will reduce my gain.
Anybody else come across a CGT calculator?
Scott
Hi Steph,
Older houses are different. There will always be problems. It’s like a new car vs a second hand car. Obviously prior to settlment you need to check that there have been no changes to the property since contract exchange.
The biggest problem with new buildings is water penetration. Short-cuts taken with membranes and flashings can cause huge problems. These only become apparent after heavy rain – and there’s no sign of that. A hose can show up problems, but the angle of the hose spray needs to simulate the angle of rain to test window flashings in particular.
With alot of pre 85 properties, it’s hard to justify the cost of commissioning a Tax Depreciation Schedule. And we won’t do one unless there is sufficient benefit for a client. I’ve spoken to a few Forum members over the last week about how they can self assess the value of Depreciable Assets (fixtures and fittings) and claim depreciation without having to pay for a Schedule.
I’ll be in the office tomorrow – 1300 660033.
Scott
Earl would have meant in case there was the possibility of claiming disposal of assets as a write-off. Napiers and WB are QS companies, as are we.
Scott – Depreciator 1300 660033
And Luke, your schedule should have been $660. I give readers of this forum a discount but you have to mention it when booking. Unless there was a travel loading on your job?
Send me an e-mail with your surname and job ID. If there was no travel on that job, I’ll get the boys to do you a refund.
I’ll be able to sort this out Monday.
The ATO prefer it that way too.
Rider Hunt have been around for a long time. I haven’t seen one of their Schedules in ages, but I’d say it would be pretty good – they’re not a cut rate supplier. Having said that, the format may not be ‘investor friendly’ i.e. it could be hard to read.
If you fax it to me, I’ll happily talk you through it over the phone. If there are any problems with it, you’ll be able to get Rider Hunt to correct them at no cost.
Having said that, I’ve mentioned often before there are lots of grey areas in depreciation. We take the conservative line and monitor ATO Interpretative Decisions and Rulings for direction.
To answer your specific questions:
There is no real requirement of what detail is included on a Schedule. I’ve seen everything from a one pager and up. I guess you get what you pay for. We canvassed accountants 3 years ago when we put together our current format to find out what they preferred (no point giving an accountant a Schedule that he/she will have to spend an hour fixing).
We do a 20 year Schedule with every Depreciable Asset listed seperately. In the first column is the starting value of that asset. This is the value of the asset as of the first available to let date i.e. at that point it is the written-down value. We then put down the amount of depreciation on for that item year after year until it expires. (Many accountants just take out initial written-down values and put them in their own software.)
Regarding construction cost, the QS should estimate the cost of construction at the time of construction. This estimate excludes Depreciable Assets – carpet, stove etc. So we’re talking walls, floor, roof, ceiling, doors, windows, plumbing, electrics, kitchen cupboards etc. On a 1998 construction, this amount is depreciable at 2.5%pa for 40 years from 1998.
Is a total construction cost of $66,000 for those 3 units realistic? Very possibly, if they’re typical of the properties built in place like Mt Isa. Depending on the construction it can be surprisingly cheap to throw together a little block of flats. Do you have photos?
I’ll be in the office till lunchtime today. Off up the coast after that to do a pre-inspection report on a new unit.
The number here is 1300 660033.
Scott
Thanks Shaun.
Skippygirl may have already called us. There are some regions where we don’t have guys and the jobs there incur a travel fee.
Skippygirl,
The ATO will accept construction estimates from a range of people. QSs are at the top of the list. But estimators are fine as are some builders. (Even architects are there but they’re not great at estimating construction costs – they use QSs.)
Would you be able to track down an experienced builder in the town where your property is?
Give me a call and I’ll talk you through what you’d need them to do – it’s pretty simple. You may have to pay them $200, but with the information they provide and a good accountant you’ll probably be fine.
Scott – 1300 660033
I’m wondering who are the 8 get-rich-quick gurus named in the Australian Consumer and Investments Commission report (ref: today’s SMH, page 6).
According to the report, ‘they recklessly overstate benefits and use psychological manipulation to draw people in.’
Apparently the report has been under wraps since May last year. Lots of people would have been through their seminars since then.
Scott
Kavan,
Quantity Surveyors do a range of work – cost plans/estimates, builder bill of quantities, and tax work.
Not all QSs do tax work – too many rule changes.
Some do tax work and nothing else.
Fluffy,
There is a chance it will not be worth getting a schedule done on your property. It will depend on the depreciable assets inside the property. You are allowed to self asses assets, it’s construction costs where you need a QS.
If you give me a call today I’ll be able to explain this and you can tell me more about the property. If it’s straightforward, I may be able to help you sort out depreciation estimates without you having to spend a cent.
Scott – 1300 660033
It’s not a bad idea to take a photo of repairs before you do them just in case they’re ever questioned. My property managers send me digital photos before they commission repair work.
Scott
