Hi All
Just a quick question regarding depreciation. I am trying to work out roughly how much I could claw back on a new property via depreciation on my Investment Property. Basically the cost of my property will be 180k for land and approx 180k for the house. The house will be brand new so I can assume that I have the ability to depreciate for the full term.
I think my loan payments will be in the vicinity of 2600 per month. Rent in this area seems to be approx 350 per week or maybe slightly higher. So I have approx 1200 out of my own pocket each month.
Does anybody have a (reasonable) idea of how much depreciation I would be entitled to.
Just trying to work out how much I have to pay each month to hold the house as opposed to selling it. Still need to buy my own house so I am unsure I can afford to hold on to my IP as well as finance a 400k house for ourselves.
Any hints or tips are appreciated
The property seems quite heavily neg geared, I don't think the depriation will cover it,
Take your wage Lets say $80,000
Add rent $18,200
Your taxible income is now $98,200Now minus Interest At 7.5% $27,000
Rates $1,500
Property manager fees $1200
Insurance $500
Maintenance $1,500Now depretiation. Of the $180,000 for the house you would say $20,000 is for depretiatable things like carpet,blinds etc.and the remaining $160,000 on capital works write off at 2.5% per year over 40 years. This equals
Depretiation $2,500
Capital write off $4,000Total losses $38,200
Subtract from your wage including rental return= $98,200 minus $38,200 = $60,000
So the tax you currently pay from $60,000 to $80,000 you will get back at tax time ( sorry forget the tax threshholds)
This is rough and dirty but im sure you get the idea.
Please dont nail me on exact details its just a rough guide.devo76,
I'm interested to know how you came up with the figure of $2500 for depreciation?
I would like to arrange to have a quantity surveyor put together a depreciation schedule for my IP, but would like an indication of what the return will be like when I complete my tax return.
By the way, do you know if $990 to get a quantity surveyor to put together a depreciation schedule for a 2 bedroom unit in the country is reasonable?
I paid $450 but im in a smaller town so may be cheaper there. .The $2500 was a stabin the dark as each item may be depreciatable over a different lenth of time
I paid $450 each for my properties in brisbane,…. get "deppro" to give you a qoute
http://www.depreciator.com.au are the company that I use and refer people to. Have had positive feedback from all the investors I have directed to this team of Quantity Surveyors.
They have a deal whereby if you don't get double the cost back from the ATO in year one then the report is free to keep and use over the next 20 years.
Terrific service and they cover the whole of the country. If the property is remote then they can work with the owner via photos and email to get a report done.
It is worth having a chat with them as they will happily discuss the property and tell you if a report is worth doing or not which I gather is what you are interested in.
Scott, the business owner, was on Today Tonight last week and you can even catch a glimpse of me in the clip as they filmed at one of my IPs. Was a fun afternoon and quite interesting to see how these stories are put together.
http://au.todaytonight.yahoo.com/article/40021/money/claiming-depreciation-properties
Cheers,
Thanks folks, you just saved me $400.
I gave Depro a call and they quoted $550 to create a depreciation schedule.
For your information it was Depreciator that quoted $990.
I hope that they give you as good a report – I expect they will but not all QS firms are up on the latest and I have heard bad stories about Accountant generated reports!
Are Depro going to visit the property or do a report based on your info? If it is the latter then I suspect even their quote is excessive.
I am guessing that Depreciator's fee of $990 includes travel expenses for their closest expert to visit the property. If they do the report based on your info it is much cheaper.
If Depro are doing it based on your info, and not an actual inspection, then call Depreciator back and ask them what they charge for the same report. From memory it was less than half of Depro's quote but as I can't recall the exact figure I wont suggest one.
It may seem like I am trying to drum up business for them but I am not. I have seen them to be very competitive on pricing in the past and this discrepancy puzzles me.
Cheers,
Thanks Simon,
Depro advised me that they will do an onsite inspection, but they advised me that they will be sending a data collector rather than a qualified QS. They assure me that the ATO has endorsed there assessment methods.
I confirmed with Depro that the $550 includes travel expenses. Of the $990 Depreciator quoted, $270 was for travel.
I did contact Depreciator to find out why there was such a big discrepancy between them and Depro. Their response was that they were sending a qualified QS on site rater than just a data collector. Depreciator did mention that they could do the depreciation schedule for $275 if I had the appropriate info, but they only mentioned this after I questioned their quote. By the way I don't have all of the info they require, unfortunately!
Depro also appear to offer a better guarantee than Depreciator (i.e. if the depreciation entitlements don't amount to at least double their professional fees in the first full financial year, they will refund the fee charged and provide the report for FREE).
Has anyone had a bad experience with Depreciator or Depro?
t803815 wrote:Depro also appear to offer a better guarantee than Depreciator (i.e. if the depreciation entitlements don't amount to at least double their professional fees in the first full financial year, they will refund the fee charged and provide the report for FREE).
I think that sounds the same.
Well based on that I reckon your choice is obvious.
All things being equal I would choose the cheaper option. Whilst a data collector is just an ordinary fellow as the long the report is signed off by a QS you should have no problems.
Well done
Simon,
The folks at Depreciator must have changed their guarantee. This is a quote from their website.
"If we can't get you more depreciation than our fee in the first full year of your schedule …
You get to keep the schedule FREE and use it in your tax assessment for the FULL 20 years with our compliments"I guess they had to alter their guarantee to accommodate their pricing?!?
You are more up to date than I
'The folks at Depreciator must have changed their guarantee. '
Nope, it's always been that. I think we were the first company doing depreciation work to have a guarantee. They're pretty common now.
We always like to have a QS inspect a property and put the costs together. I think the Australian Institute of Quanitity Surveyors (AIQS) also prefer members operate that way, but it's not really their job to regulate the industry. Similarly, it's not the ATO's job to regulate an industry.
It is indeed legal for a lay person to inspect a property and gather the information for a QS to cost up. This naturally reduces the price.
Lots of companies use this method. I believe one large company goes one step further where data entry operators take the information and enter it into a modified Excell program to produce a Schedule. A QS had a hand in writing the program. The QS industry is uncomfortable with this method.
Here's why I like to have a QS inspect a property. Often when we send out a Schedule, clients will have questions. They'll ask us: 'How much did you value the pergola at?' Or on a big reno they may ask 'What price did you put on the bathroom?'. The questions can be numerous.
I like to be able to go back to the QS and ask for the breakdown. Then we can tell the client exactly what various components are valued at.
Our 'after sales service' I believe is largely the reason 24% of our business is repeat business or referral originated.
Generally speaking, companies that use QSs on the ground are more expensive.
Having said that, there are lots of local QSs who do good, cheap Schedules in their local area. (Of course, on the flip side there are some small guys whose Schedules are not great – I've got a collection of them).
We have some guys in regional centres, but QSs tend to congregate near caplital cities. In places where we have people on the ground, our prices are reasonable competitive. Chances are we won't be the cheapest option, though.
Scott
Scott, thanks for the information.
While I can appreciate that it will cost more to have a qualified QS perform the on site inspection. I'm curious to know why Depreciator only offered to do the depreciation schedule for $275 after I questioned the price of the quote?
Can you also answer the following questions:
Does the QS also write up the depreciation schedule?
How do you ensure that your QSs all work to the same standards when creating a depreciation schedule for a customer?
Hi t803815,
The $275 option is only for clients with a new property who have a contract with a builder that has a total price, plans, Asset list etc. When all that information is available, the ATO want it to be used. We also usually have a chat with the builder when doing these. They don't come up very often. The gang would have just mentioned it as a remote possibility.
The guys in the field cost the building (or reno) and all Assets. They input these figures into some proprietory software that formats them. Our head QS then checks to make sure there are no anomalies before the Schedule is sent out. We also send out a monthly communication to all our guys with ATO changes, things we've heard etc.
Scott
Hi guys can you please start a new thread for your discussion about cost of surveyors etc. I keep getting post notifications and it is off topic.
Thanks
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