Forum Replies Created
Hi GH,
The house itself would not be depreciable – too old.The cost of getting the house to the new site would in all likelihood not be depreciable. Your accountant may think of a way to expense this?
Work done to the repositioned house – stumping etc – would be depreciable.
Scott
Tax Depreciation Schedules
Australia wide service
1300 660033
[email protected]
http://www.depreciator.com.auDon’t speculate about whether you erred on purchase. All off-the-plan buys are a punt.
A client of ours a year or so ago had the same problem. They bunged in a plasma TV (or some sort of wall hung TV). So there were 10 apartments to rent, but only had a flash TV. It differentiated their apartment.
Yes, they had to invest some more money (albeit on a depreciable item bought on terms), but at least they got the place rented out and got some money coming in.
Maybe you could inspect some of the other apartments on offer and see what you can do to yours to make it different?
ScottTax Depreciation Schedules
Australia wide service
1300 660033
[email protected]
http://www.depreciator.com.auHi Meak,
Anybody doing seminars in regional towns would advertise in the local papers for attendees. So keep an eye on them.
Beware of property selling groups doing seminars in regional towns. By all means go along and hear what they have to say – you’ll usually pick up something from any seminar. Just be wary when they do the big sell.
If you know of any big accountants in town, why not suggest they run a seminar? I’ve gone along and spoken at a few of them when an accountant has invited me. The speakers generally include the accountant, a planner, a local agent and me.
ScottTax Depreciation Schedules
Australia wide service
1300 660033
[email protected]
http://www.depreciator.com.auYes, what we need to do is round up the 5,000 cowardly Australians who met up on that Sunday, got drunk, and then went hunting in packs, beating up anybody who didn’t look like them. Surely we don’t want people who behave like that living here?
Tax Depreciation Schedules
Australia wide service
1300 660033
[email protected]
http://www.depreciator.com.auMy accountant is in Edgecliff. Peter Lang from PLA management. Don’t have the number with me, sorry.
ScottTax Depreciation Schedules
Australia wide service
1300 660033
[email protected]
http://www.depreciator.com.auThere must be at least a dozen providers of landlord insurance.
I know some will not insure a property if it is not managed by a property manager.Tax Depreciation Schedules
Australia wide service
1300 660033
[email protected]
http://www.depreciator.com.auYes Maruco, the reality is we all tend to judge people initially by their appearance. Of course, this is unfair and unjust and all of that, but it’s always going to be the way. That’s partly why people tend to congregate in groups defined by their nationality.
Thankfully, first impressions often change.
Your son can call himself whatever he wants to call himself. Some people will accept it, others won’t. I’d like to say that this will change, but I can’t see it happening.
Like I said, if he has sufficient self esteem it won’t matter to him what people say. And you are the person best able to build up his self esteem.
ScottTax Depreciation Schedules
Australia wide service
1300 660033
[email protected]
http://www.depreciator.com.auEverybody gets labelled, Maruco. Labels are useful things.
The ‘Greeks’ next door to me see themselves as Greek despite having been here since 1956.
Nationalities can be distinct from countries.
The Greeks next door aren’t all that keen on the ‘Lebs’ across the road. I was talking to Ahmed, one of the lebs, yesterday and asking him whether he and his mates (there’s around 20 of them) had been to beach lately. He laughed and said: ‘nah, we’re the smart lebs, they’re the dumb lebs’
Of course, the local Greeks and lebs aren’t all that keen on the local Vietnamese.
To take your point Maruco, I’ve been to Asia and been discriminated against. I’d say many people in Asia often understandably can’t tell the difference between, say, an American, an Australian or an Englishman so we all get the same label. It’s no big deal.
Appearance is everything.
Last time I was in Italy, people assumed I was American, which horrified me.
Of course your son can say he’s Australian. Some people will accept that, others won’t. But if he has sufficient self esteem it won’t matter.Tax Depreciation Schedules
Australia wide service
1300 660033
[email protected]
http://www.depreciator.com.auWe prejudge people based on our perceptions of the group they belong to.
If we prejudge a person because of their nationality, that prejudice is called racism.
Racism is a just a form of prejudice.
It’s very hard not to succumb to it, and I’m as guilty as anyone else. Seeing an Asian driver and assuming they’re dangerous means we are prejudging that driver because of the reputation that race has for driving. I live in a suburb with a large Vietnamese population. I like the impact they have on the suburb, but I’m wary of them when I’m crossing the road. And this is despite the fact that the hoons who race up my street aren’t Vietnamese.
Bikies, gays, disabled people etc are all minorities who are often prejudged.
Property investors also get prejudged.
ScottTax Depreciation Schedules
Australia wide service
1300 660033
[email protected]
http://www.depreciator.com.auIt’s a good ole fashioned turf war. Been brewing for ages. Yes, there was an incident the previous week that was a catalyst, but there would have been other incidents over the years and both sides would have alternately been at fault.
Locals in all beachside suburbs inevitably feel like owners of their beaches – their rates contribute to their upkeep. Problem is people from less affluent inland suburbs are drawn to the beach, and often they travel in groups. Then when they are at the beach they sometimes behave in ways that upset the locals. One complaint from the locals at Cronulla is that the ‘Lebs’ come and play soccer on the beach instead of lolling about basting themselves with oil.
Sure, the visitors sometimes behave badly (or differently), but locals can also behave badly – I had a bad experience at Maroubra beach last year and they were definitely locals.
Deep down, most of us are racist, even if we don’t think we are. Comments like this are unconsciously racist:The reality is, aussies are not in the same league or mindset as these guys when it comes to violence.had there been 5000 rampaging middle eastern people Then you would have seen real violence and no victims would have walked away…if the opposing team had turned up. They would have bars knives and guns.Then there was this comment:
Noting more attacks on the news this morning on innocent Aussie people doing things like putting out the garbage!Well, in today’s Sydney Morning Herald there is a quote from a local. He said he was inside his house and he heard shouting outside either Monday or Tuesday night:
“We just grabbed anything, baseball bats, kitchen knives and ran out.”
I don’t think that guy was just putting the garbage out.
Turf wars at Sydney beaches have been going on sporadically since the 60s. With Sydney’s population increasing, there will be increased pressure on the beaches. And that pressure will come from people in predominantly ethnic suburbs – the coastal suburbs tend to be more Anglo.
ScottTax Depreciation Schedules
Australia wide service
1300 660033
[email protected]
http://www.depreciator.com.auhttp://www.househunters.com.au is one I’ve heard of.
Lots of info on their website.
ScottTax Depreciation Schedules
Australia wide service
1300 660033
[email protected]
http://www.depreciator.com.auWhat’s the problem with the current tenant? You don’t want to be lumped with that.
ScottTax Depreciation Schedules
Australia wide service
1300 660033
[email protected]
http://www.depreciator.com.auMe again.
Of course, when you do the reno, you need to put a value on the things you’re tossing out (The ATO term is ‘disposal’) so you can claim them.
If the stove is worth $350 and you toss it out, there’s a deduction of $350 sitting in a mini skip.
Same for carpet, blinds etc.
As an aside, for who have owned a rental property for a year or two where they are thinking of ripping up the carpets and polishing the floors. Did you know that can legitimately be claimed as a repair? There’s an ATO ID on this.
Scott
Tax Depreciation Schedules
Australia wide service
1300 660033
[email protected]
http://www.depreciator.com.auPossibly the best way to view this sort of work is as a ‘renovation’. And the cost of renovations can be depreciated. It’s been a bit of a grey area, so I did some research for my own knowledge. Work that you do after purchase and prior to renting the property out can essentially be depreciated. Naturally, it can’t be claimed as repairs/maintenance.
Upon sale of the property, the undeducted portion of the reno i.e. anything you haven’t claimed yet, may be added to the cost base. Need to check with an accountant on this one, as I’m not 100% sure – it’s accountant territory.
Delaying some work for a while would help to spread the costs, but the work could not be claimed as repairs unless it was to rectify damage caused by your tenants i.e. it can’t rectify damage that existed at the time of purchase. Yes, this is where things get really grey.
I did a seminar last for the Somersoft gang in Sydney and had references to some ATO decisions regarding ‘Initial Repairs’. If you (or anyone else) send me an e-mail I’ll send you a copy of the presentation.
ScottTax Depreciation Schedules
Australia wide service
1300 660033
[email protected]
http://www.depreciator.com.auI’m not sure how accurate that estimator is, either. I think the best way to judge these sort of things is by looking at how much information needs to be entered. If it’s bugger-all, it stands to reason that the accuracy must surely be questionable.
We’ve just about finished building an on-line depreciation estimation tool.
It has quite a few pages and I reckon it taks about 15 minutes to step through them. That may prove to be a barrier to use. Cutting it down would have compromised the accuracy, though.Tax Depreciation Schedules
Australia wide service
1300 660033
[email protected]
http://www.depreciator.com.auI’d say my guys get one or two calls per day from people asking what depreciation they may be able to get on a ‘typical’ unit/townhouse/bungalow etc.
It’s a tough question, because what is ‘typical’?
If people send us some internal and external photos we can sometimes give an estimate.
There is a QS industry publication called Rawlinsons that gives square metre rates for various construction types all over Australia. It’s not sufficient for tax purposes, but a useful guide. Rawlinsons costs a few hundred dollars, so I’d try a library.
As Les and Rixter have said, once you’ve arrived at a construction cost, depreciation on the building isn’t too hard to work out. If it cost $80K to build in 1995, depreciation will be $2,000 per year. (Incidently, it’s surprising how little things cost to build, say, 15 years ago. In some places, $50K would have built a reasonable free standing house back then.)
Depreciation on the fixtures and fittings can vary wildly. There is no real ‘typical’. If a 1990 townhouse has carpet, air con, stainless steel appliances etc it’s going to yield more depreciation than a 1990 townhouse with polished floorboards, a ceiling fan and a dodgy upright stove.
Roughly speaking, using the Diminishing Value method (which 99% of investors use), around 80% of the available depreciation on fixtures and fittings is claimed in the the first 5 years (weighted toward the first couple of years). So if you’re looking for decent depreciation, you want decent fixtures and fittings.
On a brand new project home, the total value of fixtures and fittings can range from $12K to $20K.
Take a brand new project home with a contract cost of $170K. Deduct from that $20K in fixtures and fittings so you’re left with $150K in construction ie. $3,730pa.
Of that $20K in fixtures and fittings, $6-7K may be able to be claimed in the first year. So the total depreciation claim may be around $10K for the first year.
Now let’s say it’s a lower quality project home. Remember, there is no ‘typical’. The contract price is $120K and the fixtures and fittings pretty basic – $12K worth.
So the construction cost of $108K depreciates at $2,700 per year.
Of that $12K in fixtures and fittings, there may be $4K claimable in year one.
That’s going to give a depreciation total of $6-7K in year 1.
Anyway, that’s just a really rough way of having a stab at possible depreciation. The age of the of the building, the construction type/quality and the nature of the fixtures and fittings all need to be taken into account.
ScottTax Depreciation Schedules
Australia wide service
1300 660033
[email protected]
http://www.depreciator.com.auI bought something through them 2 years ago – yes, it was a tad lazy.
It turned out a good buy largely because the market took off.
I found them okay. Their research does seem pretty extensive.
I’m still on their mailing list. This week something came through for a proposed development (Ramada property) in Ballina. I think there is a market in that town for something like that. I’d be more interested in that development than something in Cairns right now. But I’d be wary about buying off the plan in any region at the moment.
ScottTax Depreciation Schedules
Australia wide service
1300 660033
[email protected]
http://www.depreciator.com.auSo you’re Canadian and you’ve had a nice little windfall.
I’d flog it. Unless you’ve got plenty of money and time and want to chance your hand at developing.
If you like the idea of having something in Australia for the future, buy something with fewer headaches from the sale proceeds.
Have you had the place valued? What are the tax implications for you if you sell it?
What a nice dilemma to have.
ScottTax Depreciation Schedules
Australia wide service
1300 660033
[email protected]
http://www.depreciator.com.auI’m not entirely sure what you mean by:
i would like to know (for the purpose to calculate the building depreciation) the ratio of the capital cost to the property value…You can’t work out a construction cost estimate from the property value, if that’s what you’re getting at.
As Brahms said there is a building/QS industry book called Rawlinsons. It costs $2-300, so I’d try a library first.
Rawlinsons can tell you how much a property may have cost to build using square metre rates. Let’s say you’re looking at a 60sqm apartment in a Melbourne CBD block built in 2002. Using Rawlinsons you will be able to work out a rough construction cost.
The ATO clearly states that these figures will not be suitable for tax purposes.
Scott
Tax Depreciation Schedules
Australia wide service
1300 660033
[email protected]
http://www.depreciator.com.auI bet the ATO has never been asked about depreciating a hole in the ground, so it would require a Private Ruling. They’re not hard to get – I think you can do it on-line.
Depreciation on buildings is there because the structure deteriorates over time. The ATO logic would probably be that a hole doesn’t constitute a ‘structure’ i.e. it’s a negative space. Of course, there would some electical wiring, plumbing and wall/floor treatments that could be depreciated. Plus no doubt a ladder.
I wonder how many people rent a hole anyway? And of those locals who perhaps rent a hole to someone else, I wonder if they’re paying tax – I suspect the cash economy is alive and well in places like Coober Pedy.
ScottTax Depreciation Schedules
Australia wide service
1300 660033
[email protected]
http://www.depreciator.com.au
