tax deductions

Five things to know about depreciation this tax time

With tax time fast approaching, claiming depreciation is the key to increasing cash flow from an investment property.
tax deductions

BMT Tax Depreciation has some tips for investment property owners when it comes to claiming depreciation at tax time. Below are five ways to make sure you get what is yours.

1. Don’t miss out on depreciation deductions

Property investors are entitled to a range of tax deductions which help to lower taxable income and make owning an investment property more viable.

Some of the tax deductions available include council rates, the interest from a mortgage, property management fees, land taxes, strata fees, maintenance costs, insurance, accounting fees and depreciation.

Of these deductions, depreciation is the most commonly missed.

This is because it’s a  non-cash deduction.

That is, investors do not need to spend any money to be eligible to claim it.

Research has shown 80 per cent of property investors are missing out on the depreciation deductions they’re entitled to.

To ensure that depreciation is being claimed correctly and maximised, investors should contact a specialist Quantity Surveyor, such as BMT Tax Depreciation, to organise a comprehensive depreciation schedule.

A BMT Tax Depreciation Schedule outlines all the deductions an investor can claim for their investment property. It lasts for forty years and the fee for preparing it is 100 per cent tax deductible.

During the 2017-2018 financial year, BMT Tax Depreciation found their clients an average of $8,212 in tax deductions in the first year claim alone for residential properties.

Visit BMT’s tax depreciation calculator for an estimate of the deductions you may be entitled to.

2. If you recently purchased an investment property, you can still make a claim this tax time

The Australian Taxation Office (ATO) allows investors to claim depreciation based on the number of days a property was available for lease.

A BMT Tax Depreciation Schedule makes partial year claims like this easy for the property investor and their accountant and can pro-rata deductions based on the percentage of time the property was available for rent.

3. Have you made improvements? Don’t forget to update your tax depreciation schedule

If improvements have been made to the property in the past financial year, like a renovation, it’s a good idea to get in touch with a Quantity Surveyor to see if you will require an updated depreciation schedule.

It’s important to be aware there is a difference between a repair and a capital works improvement, as this will affect the claim. The cost of any repairs can be claimed in full in the same financial year they are completed.

An improvement, on the other hand, is when you improve the condition of an item or property beyond that of when it was purchased. Such improvements are capital in nature and must be depreciated over time.

For this reason, if any renovations or improvements have been made to the property in the last financial year, the property investor should seek the advice of an experienced Quantity Surveyor to ensure their deductions are claimed correctly.

Find out more about BMT Tax Depreciation by visiting their website.

An updated tax depreciation schedule may be required after a renovation to capture all newly installed plant and equipment assets or capital works expenditure.

4. Discuss tax depreciation deductions with your accountant

An accountant will often refer property investors to a Quantity Surveyor or contact them on your behalf to arrange a schedule.

While they can process the deductions, they can’t estimate construction costs to provide you with the tax depreciation schedule.

Only a qualified Quantity Surveyor can do that.

Quantity Surveyors are one of the few professionals recognised under Tax Ruling 97/25 to have the appropriate construction costing skills to estimate building costs for depreciation.

However, not all Quantity Surveyors specialise in tax depreciation.

Only a tax depreciation specialist like BMT can be relied on to maintain detailed knowledge of all current ATO Tax Rulings relating to depreciation.

Once a tax depreciation schedule has been completed, an Accountant will input these deductions into the property investor’s annual income tax return.

5. Amend previous tax returns and don’t miss out on claiming past years’ deductions

Investment property owners often enquire about a property they have owned and rented for a number of years and they haven’t claimed depreciation deductions before.

The ATO allows tax returns to be easily adjusted for two years after the initial submission. This enables property owners to recoup some of the deductions that may have been missed.

It’s important to note a separate application will need to be submitted for each financial year requiring an amendment.

Income, depreciation and other claims made will impact the outcome of each tax return.

If you have missed or not maximised your claim in previous years, the depreciation schedule can be tailored within the eligible years.

BMT offers a guarantee to all clients that if we can’t find double our fee in deductions in the first full financial year, we won’t charge for our service.

To learn more about depreciation, visit the tax depreciation overview page on the BMT Tax Depreciation website.



Source: The Real Estate Conversation 7th May 2019

This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.

date night

Upgrading Your Home: Save Money Without Giving Up Date Night

There are a few things Aussie homeowners aren’t willing to sacrifice when saving for an upgraded property, and date night is one of them. ING’s Upgraders Homeownership Survey Report found that only 25% of those surveyed would give up social activities—for example, date night—in order to speed up their savings.

Saving for an upgraded home means that you’ve already got a roof over your head, so there may be less pressure to cut little luxuries from your budget. But Aussies are saving money in other ways that might surprise you.

One in five home buyers moved interstate to places like Brisbane or the Central Coast, where house prices are more affordable. Over half of the survey respondents reported that they were thinking about an interstate move in the following year.

That’s not the only way buyers are saving for a home upgrade. Over one-third of people who upgraded in the past year took in a flatmate for help with the rent. Of those, 32 percent were families.

If you want to upgrade but don’t fancy moving states, taking in a renter, or getting rid of date night, what are your options?

Balance is the key to saving, whether it’s your first home, your second home, or your tenth. While you may need to cut out some small luxuries, you don’t have to give up everything that you enjoy.

Of course, it feels great to upgrade to the home you’ve been dreaming of, but not at the expense of everything you enjoy. Here are some tips for making the most out of your savings, without putting a padlock on your wallet.

Identify your priorities
Start by identifying your priorities, both in terms of your upgrade goals and your day to day lifestyle. First, ask yourself what you hope to gain by buying a new property.

The ING survey found that 40 percent of upgraders want a nicer house. Other reasons include the desire to relocate to a different area, to get more outdoor space, or simply to get a larger house for their growing family.

If you’ve outgrown your house, the timing of your upgrade may be more important than the house itself. If you’re looking for a specific property but are in no rush to move, your priorities will be different.

The next step is to figure out your lifestyle priorities. Think about how you spend your disposable income: is it coffee, dinners out, and movie nights? Or is it beach holidays, organic produce, and clothes? Whatever it is, decide where you can and can’t budge.

Look for deals
Put your investigative skills to the test and start hunting out the savings. If you don’t want to give up date night but you need to save money, you’ve got options. Use websites like Groupon and Scoopon to find discounted deals on restaurants, activities, and more.

You can also install a browser attachment like honey, which will automatically seek out coupon codes for purchases you make online, giving you the opportunity to save even more on your purchases.

Airbnb your space
Got space to spare but don’t want to take in a long term tenant? Consider using Airbnb to temporarily rent out a room in your home. While this does mean having paying guests staying in your home, it gives you more control over when you’ll have tenants. This can work well if you’ve got a granny flat or a bedroom with its own private entrance.

Take turns hosting
Sometimes the best part of social activities isn’t going to a restaurant or bar, it’s simply being somewhere different. Take turns with your friends to host social events like game nights or dinners. It doesn’t have to cost much, but you’ll still get out of the house and have a good time.

Go digital at the library
If new magazines are your weakness, the costs can add up quickly. Turn to your local library, where you can often download digital copies of the latest magazines and books onto your own device. Bonus points for being good to the environment!

Use a keep cup
If a good cup of coffee is important to you, we’re not going to tell you to give it up. But you might be able to reduce the cost of your daily java by using a keep cup. Many coffee shops discount the cost of your coffee when you bring your own cup, so invest in a reusable option and save over time.

Set a budget
Establish a weekly or monthly budget for little luxuries like dining out or shopping—the amount is up to you and your household—but don’t exceed it. That way you can still do the things you enjoy, but without worrying that your spending will snowball.

Compare home loans
Compare home loans annually to ensure you’re still on the best rate and getting the features you want. Our home loan professionals are here to help you get the most from your money. It’s quick and easy—in just a few clicks you’ll be on your way to saving.

Knowing you’re on the best possible rate can give you peace of mind at the very least!

Consolidate your subscription services
With entertainment options like Netflix, Hulu, and Foxtel on the table, it seems that spending a little bit of money on a monthly subscription can lead to greater savings.

But if you oversubscribe, you’ll end up spending much more than you might have on a few movie tickets. Take stock of your monthly subscriptions: could you pick just one and get rid of the rest?

Finally, finding balance in your budget is about being thoughtful, not restricting every activity that makes you feel good! There’s a reason that Aussies are reluctant to eliminate date night, and that’s because it offers real value.

Don’t underestimate the difference a mortgage broker can make when shopping for an upgraded property. A home loan professional can help you find great deals on a new mortgage, so your savings go even further than you’d hoped. Compare home loans now with the experts.

Source: Your Investment Property 11th March 2019

This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.

first home deposit

5 Top Tips To Save Your First Home Deposit

If you want to have your own little piece of property to call home – a place where you can paint the walls any colour you like, and hang paintings on every other wall – you’ll need to start saving for a first home deposit. Read more

eco-friendly money tips

Eco-friendly Money Tips

Making a few small changes to the way you run your home and business can reduce your impact on the environment and boost your bank account.  Try these eco-friendly money tips out for yourself. Read more