Today i received my Dep schedule from Rider Hunt for a block of 3 units (2x2bed, 1x1bed) i purchased in Mt Isa in December. I am not sure if it is of a good quality or not. Can you give me some advice on the info they should have included? Should they have listed each item and the written down value from date of purchase to day it is fully depreciated?[confused2]
One point i wish to hightlight – I understand the building can be depreciated or writen off as a capital allowance of approx 2.5% (units built in 1998) but i thought it should be written off on the actual (or estimated) construction costs – not what i paid for it. They are basically telling me that the block was constructed for approx $66K – if that is the case, i think it was a damn cheap construction job. Am i wrong here? I would appreciate advice and comments from members from the forum.
I have just got my very first Depreciation Schedule done up (havent received it yet)
Out of interest how much did you pay for yours??
The 66k they have allowed for construction costs are ACTUAL construction costs only, which doesnt include the builders profit margin or GST (if any). This also wouldnt include any landscaping etc done on the property.
From my understanding the reports are supposed to be quite detailed and easy to understand.
If you arent sure about it, give them a call and question them about it -hey, its your money on the line! Secondly make sure your accountant has a good look at it (im sure you would anyways)!!!
Luke [cap]
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
Devil – the cost for the schedule is $770 inc GST. What confuses me is that they have worked out the land component, building component etc based on my purchase amount ($130K). I would have thought it should be done on the actual costs …..I have so much to learn…
Mine was $715 through Depreciator.
I would have thought that it had to be based on actual costs. [hmm]
I have so much to learn too [rolleyesanim] *sigh*
Its all a lot of fun tho, can be frustrating at time, but lots of fun [oink]
Luke [cap]
The ATO prefer it that way too.
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.
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