Property Depreciation Schedules - The New reality

Depreciation Schedules – The New Reality

The COVID-19 pandemic has forced many businesses to reflect on “industry norms” and the way they operate. We are no exception.

At Washington Brown we believe in researching each property and advising clients on the best way to approach achieving the maximum depreciation in the most cost-effective way.

Not EVERY property needs to be inspected in order for the maximum claim to be achieved.

This USED to be the case – but the tax legislation recently changed and property investors can no longer claim depreciation on items like ovens or dishwashers that are not brand new.

So NOW you can only claim depreciation on the structure of the building like concrete and bricks for 2nd hand properties.

If you BUY brand new items like carpet and blinds, you can still claim depreciation but it must be based upon the purchase price (not an estimate).

In the OLD days, we used to visit the property so we can value these items individually, the ATO put a stop to that.

Our Commitment to Property Investors Moving Forward

If we determine that an inspection is NOT required to ensure the maximum depreciation claim – this will reduce our fee AND you’ll receive the report sooner. Let Washington Brown work out the best depreciation plan for your property here.

Here are 5 reasons why SOME properties do not require an inspection:

  1. Extensive Database – In 40 years we have amassed an extensive database of construction costs for the majority of residential and commercial buildings around Australia.
  2. We have the costs – We are familiar with your building and as such, we already have the construction costs on file.
  3. Plant & Equipment no more – You have purchased a second-hand property so you cannot claim on the existing plant and equipment components.
  4. Online data – There is an abundance of detailed information and pictures of your specific property available online (both publicly and via subscription-based industry databases).
  5. You have the costs – Your property is a brand new build and you have access to the construction cost, plans and inclusions list.

Here are 5 reasons why SOME properties STILL NEED an inspection:

  1. Your property is unique – Your property is classed as High Spec/Luxury/Non-Standard and therefore not typical. An inspection will ensure the maximum deductions by ensuing all facets of your property are assessed and included.
  2. Non-residential – This means you can still claim the full benefits of depreciation including the Plant & Equipment (carpets, blinds, etc.)
  3. Renovated – Your property has been substantially renovated. There is insufficient information online and as such an inspection is necessary to maximise the depreciation.
  4. More information required  – We do not have access to sufficient information specific to your property. We, therefore, need to acquire this via an onsite assessment.
  5. Plant & Equipment – Your property qualifies to claim Plant & Equipment deductions, an inspection ensures no assets are missed, which means your deductions are maximised.

Let Washington Brown work out the best depreciation plan for your property by getting a quote here. Or work out much you can save by using our free Property Depreciation Calculator.

Budget Changes to Depreciation

Budget Changes to Depreciation

The 6 must-know takeaways from these budget changes:

  1. For residential property, you will only be able to claim depreciation on plant and equipment items (ovens, dishwashers etc.) when you buy a brand new property.
  2.  You will still be able to claim the building allowance (bricks, concrete etc.) on any residential property built after 1987.
  3. If you bought a property built prior to The Budget on the 9th of May, 2017 when the changes were announced, you are not affected in the slightest.
  4. There is no change at all to commercial or other non-residential property.
  5. If you personally buy any item for your property after the settlement you can still claim the depreciation on that particular item.
  6. Perhaps the most interesting point: Whilst investors purchasing second-hand property can now no longer claim depreciation on the existing plant and equipment, they will have the benefit of paying less capital gains tax when they sell the property, by claiming any unclaimed depreciation as a capital loss.

Moving forward, property investors will have a choice of ordering a building allowance report only, a CGT schedule or a combination, from Washington Brown.

Depreciation Calculator