JULY 2022 NEWSLETTER
A WORD FROM OUR DIRECTOR
July has been an interesting month with rental team experiencing some great results in the later half. Enquiry level and properties leased double from July to June. Average rental price also increased by 2.1%. But the most amazing increase was number of applications received. June, we received 30 applications and July 202. As winter slowly turns into spring the rental market we normally peak in August. With last three years, August has been second busiest month for properties leased. The demand for one and two-bedroom units has increased, with one property in Eaglehawk increasing from $210 per week to $320 per week. Sales is transiting to normal market but with 9 properties sold it shows the market is in a good holding pattern with spring expected to draw out more buyers and sellers. Stay warm and safe.
TAX DEPRECIATION BENEFITS
Property depreciation of an investment property is a legitimate tax deduction against assessable taxable income. Property depreciation is not just for the pros. Anyone who purchases property for income-producing purposes is entitled to depreciate both the items within the building and the cost of the building itself, against their accessible income. The savings can be substantial. Below are answers to some of the most common questions about depreciation.
1. WHAT IS PROPERTY DEPRECIATION?
There are two types of allowances available
Plant and Equipment refer to items within the building such as dishwashers, ovens, carpet and blinds etc.
Building Allowance refers to construction costs of the building itself, such as concrete, timber and brickwork. These sorts of costs can be offset against your assessable income.
2. HOW DOES A DEPRECIATION SCHEDULE HELP ME?
It’s quite simple really. A depreciation schedule will help you pay less tax. Your taxable income is reduced by the amount that the depreciation schedule specifies. Depreciation is known as a “non-cash deduction” because it’s the ONLY deduction that you don’t have to pay for on an ongoing basis. The deductions are in-built within the purchase price of your property. All other deductions, such as interest levies, are expenses that will hurt your hip pocket on an ongoing basis.
3. IS MY PROPERTY TOO OLD TO CLAIM DEPRECIATION?
Perhaps not. If your residential property was built after July 1985 you can claim both Building Allowance and Plant and Equipment. If construction on your property commenced prior to this date, you can only claim depreciation on Plant and Equipment. Nevertheless, the savings will still be worthwhile.
4. WHO CAN PREPARE THIS REPORT?
Real estate agents, property managers and valuers are not allowed to prepare a depreciation schedule. If your residential property was built after 1985 your accountant is not allowed to estimate the construction costs. Tax Ruling 97/25 issue by the Australian Taxation Office (ATO) has identified Quantity Surveyors as properly qualified to make the appropriate estimate of the construction costs, where those costs are unknown. Quantity surveyors are specialists in the accurate measurement of construction costs with a view to maximizing a client’s financial position in relation to their property assets.
5. WILL THE QUANTITY SURVEYOR NEED TO INSPECT MY PROPERTY?
Site inspections are necessary to satisfy ATO requirements. A trained Quantity Surveyor will ensure all depreciable items are noted and photographed. This guarantees you won’t miss out on any deductions. The documentation can then be used as evidence in the event of an audit. The best time to get a Quantity Surveyor to inspect your property is immediately after settlement and just before the renter has moved in.
6. CAN I STILL CLAIM IF MY PROPERTY IS RENOVATED?
Yes. You will need to know how much you spent on renovations. This is an ATO obligation. If the previous owner completed the renovations you are STILL entitled to claim depreciation. In either case, where the cost of renovation is unknown, a Quantity Surveyor has been identified by the ATO as appropriately qualified to make that estimation.
7. HOW MUCH WILL MY DEPRECIATION SCHEDULE COST?
The cost of preparing a tax depreciation schedule varies according to the type of property you’ve purchased, location, size and numerous other factors. Quantity Surveyors fees are 100% tax deductible.
𝗡𝗔𝗧𝗜𝗢𝗡𝗔𝗟 𝗣𝗥𝗢𝗣𝗘𝗥𝗧𝗬 𝗠𝗔𝗡𝗔𝗚𝗘𝗥 𝗗𝗔𝗬
We are extremely proud of all our property managers who do an incredible job day-in, day-out. The team has had a terrific past 12 months, achieving some awesome results for our residential rental providers and renters. We are thrilled to have such a great rental team, and we can't thank them enough.
JUNE ANNIVERSARIES
RENTAL TEAM
