Quantity Surveyor question

You probably hsould do it with an older house. Some companies guarrantee to save yuo more than there fee (www.depreciator.com.au I think). Cost varies from $300 to $1000. Some are better than others, so watch out.

You probably should get them to come out as soon as your purchase, but they can do it so you can claim and amend the last 4 years tax returns.

As a guide, one of my clients purhcase an older style unit (red brick type, no pool or elevator) and he was able to claim an extra $4000 per year! So well worth the effort.

Terryw
Discover Home Loans
North Sydney
[email protected]

Hi Mark,

I use deppro & I’m happy with their service– http://www.deppro.com
The reports cost approx $400 (from memory)

I agree with Terry, do it as soon as you purchase the property & defiantly still do it with older houses. I’d always have a schedule done – it makes claiming depreciation easier.

Cheers
Kym

Just a few points to help the discussion.

Deppro charge $440 (GST inc – without travel) for their QS reports and they will give you a detailed 40 year report. Be aware that Deppro are a little limited in their capacity to travel and as such there may be a travel cost included depending upon where your property is.

Having a report compiled as soon as possible after settlement enables you to apply an accurate adjustment to your wage and salary taxation rates immediately under section 15.15 of the tax act rather than waiting for the end of financial year. This is certainly more relevant for those investors who buy negative geared property or to those who want/need to maximise their cashflow through taxation deductions.

By way of an example we bought a 13 year old property for $109K last year and a Deppro report realised total depreciation claims (plant and equipment and capital allowance) of $42600 over the remaining 27 depreciable life years of the property.

As a comparison a new $148 property we bought realised $126000 of depreciable claims over the 40 year depreciable life of the property.

Renovations can add to the amount of depreciation available to you – and if you are contemplating undertaking major renovations then it is wise to get a depreciation report done so that you can maximise your claims when you through out those items of some value.

Derek
[email protected]

AIQS.com.au
Australian instutue of Quantity surveyors

have a look, phone a few up, ask qesdutions about benefits etc.

I found one on there that offered to do three properties on the same day, travel included for either 1000 or $1200, I cant recall exactly
I was to provide a schedule of fixtures and fittings.

elves

With respect to accountant doing your depreciation claims.

Below is a transcript of the tax ruling TD94/D67 . . .

. A deduction is allowable under section 124ZH in respect of qualifying capital expenditure incurred on the construction of, or an extension, alteration or improvement to certain income-producing buildings. Section 124ZG defines qualifying expenditure to be the actual capital expenditure incurred in constructing, extending, altering or improving an eligible building.

2. In circumstances where a taxpayer is genuinely unable to precisely determine the actual cost of the building, it is accepted that an estimate of the cost of construction by a quantity» «surveyor or ‘other independent qualified person’ may be used: see paragraph 19 of Taxation Ruling IT 2640. However, some doubt has arisen as to who will be accepted as a ‘qualified person’.

3. It is considered that a qualified person is someone who has expertise in the calculation of the original cost of construction and who would be likely to be accepted by a court or tribunal as an expert witness on the issue of calculating the cost of construction. That expertise may have been acquired through a course of study or relevant experience in providing building cost estimates over a significant period of time.

4. The attainment of relevant professional qualifications or recognition by an appropriate professional association or organisation would be indicative of expertise in this field.

5. Unless they are otherwise qualified, valuers, real estate agents, accountants and solicitors generally have neither the relevant qualifications nor experience to make such an estimate.

6. Appropriately qualified people might include:

· a clerk of works, such as a project organiser for major building projects;
· a supervising architect who approves payments at each stage in major projects and who may approve individual payments to subcontractors in smaller projects;
· a builder who is experienced in estimating construction costs of similar building projects; or
· another person who is suitably qualified or has experience in providing estimates or costings in similar building projects.

7. The onus of proving that a person has the required expertise rests with the taxpayer. That will be an issue of fact in each case.

Derek

[email protected]

Yes, but AMS the laws were changed only recently stating that the kitchen was now part of the building. I think it’s crap also. Who DOESN’T renovate their kitchen at least once in 40 years?

Jason, I would definitely consider getting a QS to look at your properties. Probably one who will give you a money back guarantee, or double money back as Terry suggested. They will tell you from the outset if it is worthwhile. It’s better than your accountant, as the QS can pick up lots of things your accountant wouldn’t know – especially not having seen the place.

Prop 16, unless you want to get your tax back on a fortnightly basis, I wouldn’t do my QS until June (in fact, I still haven’t done some that I need for tax 02/03 year) so that you can claim it as a tax deduction in that year.

Cheers
Mel

I’ve been led to believe that ATO requires you to have a report from a proper QS if you are to claim depreciation on anything other than the building (ie fixtures and fittings). You should check this out.

btw I also use Deppro (about $440) and have been happy with them.

AMS, OK, it may not have been a law, but the ATO definitely changed the rules.

Probably for the 01/02 return as that’s the last return I’ve done.

Kitchen cupboards, shower screens, I think mirrored wardrobes(?), and quite a few other STUPID items are now deemed as ‘part of the building’ by the ATO, and therefore only depreciable at the 2.5% building depreciation rate. Crock of s**t if you ask me.

Do a search on the website, or ask any QS or accountant who deals with property.

Cheers
Mel

Hi TeacherK6

Cost is deductible

We use and recommend clients to BMT

Also, no one has mentioned the sting in the tail when you come to sell the property and the tax treatment of Div 40 & Div 42 deductions.

Steve, at the Nov 03 Sydney reckons it’s recouped and not eligible for the 50% discount. Our tax advisers Hayes Knight reckon you ” apportion the sale price accordingly” what ever that means. Nowhere on the ATo site is a worked example.

Regards
Tony