I’ve made the choice to better my families lives by investing in property and as such have started to read a few books on the matter. While trying to do some test runs with the figures(to get the hang of it all) on different property in different areas I couldn’t find an answer to my problem. The special building write-off that is 2.5% for building made after sep.87 for 40 years from construction date, my logic says that it is the price of materials at time of constuction. So if I buy a property which would cost me say $160,000 in materials to build today, but when it was built it only cost $80,000 in materials. I can claim 2.5% of the $80,000 for the remainder of the 40 years from construction.
My next problem is I’m was only a kid when these houses got built so i dont know how much the materials would’ve cost back then, hence it makes it hard to get a correct figure for this. Not that it would alone stop me from buying a place (as it is the icing on the cake)but I like to know all the details before I buy a place.
It’s not really viable to get a quantity surveyor to asses every property i look into. Does anyone out the have some sort of chart or formula that could give me an idea about what it would be for different buildings.
thankyou
benHi Ben,
You have the correct understanding of how depreciation works – and as you correctly pointed out a quantity surveyor can determine the appropriate building costs and also the value of the depreciable plant and equipment.
However depreciation should be seen to be the ‘icing on the cake’ and as such you need to firstly ensure the property will provide the income or growth you are seeking from your property portfolio. These are far more important considerations when selecting a property than the value of the claims attached to the property.
As a guide though you may be able to locate a website that has a summary of building costs per square metre that, will however assist you with your calculations.
Scott (AKA Depreciator) will be able to add some expert commentary to the discussion when he next logs on.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
Hi Ben,
You really are a thinker! It is a good idea to do your research before making decisions that involve large sums of money – especially if it will impact on your family.
However (IMHO), to get the most accurate answer to your question, I’d just leave it in the hands of a good quantity surveyor as well as an accountant who has experience and an interest in property investing. I believe it is money well spent, not only is this thier specific area of knowledge and expertise but it also saves you the time and the hassle.
Regards
SonjaBen,
The developers on this site will probably be able to give you a generalised answer to this. Maybe you could just ask in the Development section, how much it would have cost to build a unit/house 10 years ago in a particular area and see what they come up with.
And you’re right about not getting a depreciation schedule before you purchase- they cost >$600, so doing an estimate in your head first is a good idea.
As Derek said, Scott (depreciator) will probably be able to give you an idea of what it cost too.
kay henry
Hi Ben,
There is a publication called Rawlinsons that would help. It has data on historical construction costs. I think the residential version is around $200. Not sure if there is a CD version. You’d probably find a copy at some libraries. If you’re in Sydney, the Building Information Centre might have something.
I’ve never looked at the Somersoft calculators, but somebody once mentioned there was something there that helped calculate depreciation. My guess is that it would be pretty rudimentary. We’re going to build one, and it will be a good one, but every time I look at it the thing gets bigger and more daunting – there are so many variables. We’ll probably charge $20 per use to recoup costs.
I’ll be offline for the rest of the week. If you have any other questions, try Nicola at the office 1300 660033.
Scott
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