THE CGT Saver Report

   

Let me introduce you to our new product, the CGT Saver™ Report – A report specifically created to prevent our clients from paying too much in Capital Gains Tax.

Although you can no-longer claim depreciation on second-hand Plant & Equipment Items (ovens, dishwashers, etc.), with Washington Brown’s CGT Saver™, you can claim the applicable and documented value as a capital loss if you remove or replace any of these in the future.

Similarly, using this report, if you were to sell a second-hand property with those items still intact, what you would have been able to claim in depreciation in the past, you can now claim as a capital loss which reduces your capital gains tax bill.

This report lists and values all those included items that you have purchased at settlement. It then allows you to claim a capital loss straight away if any of these items are removed.

The best bit…This loss can offset other share &/or property gains that you might make.

This report is exclusive to Washington Brown, so ask for it by name and contact us to find out more.

Building Allowance Maximiser

Let’s talk about bricks and mortar. Or what the Government calls the Building Allowance.

Whilst you can no longer claim depreciation on plant and equipment in second-hand investment properties, that’s the things like ovens, dishwasher etc.

You can still claim the structure of the building, that’s the bricks, concrete, windows, tiling, etc. provided the residential property was built after 1987.

And these costs typically represent about 85% of the construction cost of the property.

And that’s good news, but I want to turn it into great news!

Up until now, when you ordered a depreciation report, quantity surveyors give you a lump sum total for your building allowance, based on the government’s guidelines that these items last approximately 40 years.

But in our experience, that’s not true.

Investors tend to update things like kitchens and bathrooms every 20 years.

So Washington Brown has come up with the Building Allowance Maximiser report, and it’s the only one of its kind.

What it does, it splits the building allowance into different categories, based upon our research of what items wear and tear more quickly.

Which means, if you use our report, when you replace those items or update them, you’ll be able to claim the full amount as an immediate tax deduction.

Let’s say I bought a property 20 years ago, with a kitchen that cost $10,000 to build.

Now, because it’s halfway through its 40-year life, I’ve only claimed 50% of its depreciation, which is $5000.

When I remove it today, using Washington Brown’s new report, I’ll be able to claim the remaining 50% as an immediate tax deduction.

Not bad!

So, if you want to claim the maximum building allowance that you’re entitled to, order a report today.

We are pretty proud of it, and my expensive lawyer thinks it’s a patentable system so we have a patent pending.

 

The Top 14 Questions from the Budget Changes

Well, the dust has finally settled on the new legislation regarding changes to the budget changes to depreciation that will apply to second-hand residential properties.

In this article we will dig deep into some of the questions we have commonly been asked since the 9th of May 2017, when the changes were announced in the Federal Budget.

Before we get into the nitty gritty let’s begin with a quick recap:

Property investors who acquire a second-hand residential property after May 10, 2017, that contain “previously used” depreciating assets, will no longer be able to claim depreciation on those assets. Depreciating assets, in this case, refers to things like ovens, dishwashers & blinds etc.

So let’s start with some of the easy questions we’ve been asked.


1. Do these new rules apply to brand new investment properties as well?

No, they don’t,  if you buy a brand new property you will be able to carry on claim claiming depreciation exactly the way you have done so to date. That means you can claim both the plant & equipment and structure of the building.

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2. How do these new changes affect purchasers of non-residential property like offices and industrial suites?

The proposed changes only relate to residential property. Commercial, industrial, retail and other non-residential properties are not affected in the slightest.

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3. Can I still claim depreciation on things like the bricks, concrete & windows etc?

Yes you can, provided the residential property was built after 1987 when the building allowance kicked in.
You will still need a depreciation schedule to calculate these deductions. This component typically represents approximately between 80 to 85 percent of the construction cost of a property.

Now would be a good time to get a quote for your depreciation schedule.

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4. Can I still claim depreciation on plant and equipment items if I buy them and have them installed?

Yes, you can, provided they are brand new or from 2nds World or the like.
However, if you buy a second-hand item off Gumtree, for instance, you cannot claim the depreciation.
There is now no other depreciable asset class where this occurs.
The new laws state that the item cannot be “previously used” in order for you to claim the depreciation on it.
However, if you buy a “previously used” lounge off Gumtree and put it in your office – you can claim it.
Go figure!

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5. If I buy a property in a trust or company will I get around these laws?

The proposed changes do not apply if you buy the property in a corporate tax entity, super fund (note Self-Managed Super Funds do not apply here) or a large unit trust.

This is interesting and I suspect a lot more people will start buying properties in company tax structures.

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6. What if I bought a property prior to the budget and lived in the property until now – can I claim the depreciation?

If you bought a property prior to the budget and it is owner-occupied, and then you move out after 1 July 2017 – you will not be able to claim depreciation on the plant and equipment in that property.

The property needed to be income producing in the 2016/17 financial year.

Those items will be deemed to be previously used and caught in the net of the new legislation – even though you acquired the property prior to the budget. So, these changes are kind of ‘half-grandfathered’, if you ask me. If you did buy an investment property prior to the budget, I would recommend getting a depreciation quote now, more then ever.

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7. What happens If I inherit a property – can I claim the depreciation on the plant and equipment as well as the building?

Well, you will certainly be able to claim the depreciation on the residential structure of the building, provided it’s built after 1987. So there’s no change there – and this covers most properties.

Whilst there is no specific ruling on the plant and equipment it seems to me that if you inherit a property with plant and equipment items contained within, they will be deemed to be “previously used” and you won’t be able to claim them.

This would, in my opinion, even occur if the person that you inherited the property from, bought the property brand new.

As I mentioned, there is little guidance on this topic so it might be best to check this with the ATO if this question is relevant to you.

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8. What happens if I buy a unit that’s 3 months old where the developer has already found a tenant and is selling it “as new”. Can I claim both the plant and equipment and the building allowance?

In this case, the answer is yes. The new legislation allows a developer 6 months to find a tenant and sell it as a leased investment without nullifying the depreciation claim to the incoming buyer.

This was a late change to the legislation and occurred after industry consultation between the treasury department and the property industry (including myself).

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9. Can I still claim depreciation on a property that I bought overseas?

The answer is yes, you can depreciate an overseas investment property… but there are a few key differences.

The first main difference is with regard to claiming the building allowance. With Australian properties, you’re entitled to claim 2.5 per-cent of these construction costs per annum, as long as the property was built after July 1985. The rate for overseas properties is the same – but the date is different.

Construction of an overseas property must have commenced after 22 August 1990.

So, if you want to maximise your depreciation benefits on an overseas property, look for a newer property built in the last decade or two.

The plant and equipment, such as carpets, ovens, lights, and blinds, can also be depreciated as they would be in an Australian investment property but now they will have to be brand new or not previously used.

If you own an overseas investment property, start claiming the deductions, we do many reports worldwide.

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10. What happens if I engage a builder to renovate my investment property can I still claim depreciation?

In simple terms yes – provided all the plant & equipment items that were installed were brand new. You will also be able to claim all the structural items installed such as kitchen cupboards, tiling windows etc.

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11. What happens when you sell the property that you bought after the 2017 budget?

The Budget statement words it like this: ‘Acquisitions of existing plant and equipment items will be reflected in the cost base for capital gains tax purposes for subsequent Investors.’

This video explains the changes and also outlines our new report offering:

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12. Show me the numbers?! How much will these changes actually mean in terms of how much depreciation I will be able to claim moving forward?

Well in order to understand this – it’s best to examine 3 different scenarios:

Scenario 1:

An investor buys a brand new unit or house for $850,000.
Depreciation Budget Changes

As you can see from the above chart the depreciation amount you can claim if you bought the same property pre-budget or post-budget hasn’t changed.

That’s because a brand new property is exempt from these changes.

Scenario 2:

An investor buys a residential house or unit for $850,000 that was built in the year 2000.

Depreciation Budget Changes

As you can see from the above the depreciation allowances available have dramatically reduced in the early years now.

Towards about year 8 they level out and aren’t that different. This is because the pre-budget chart on the left-hand side still shows that you can claim the plant and equipment. Whereas the chart on the right-hand side shows how you can only claim the building allowance moving forward.

The key takeaway from this is: That the depreciation allowances on second-hand property built after 1987 are affected most in the first 5 years. After that – there’s not much difference.

Scenario 3:

An investor buys a residential house or unit for $850,000 that was built prior to 1987 – that hasn’t been renovated.

Rental Property Depreciation Budget Changes

Well in this scenario it’s all or nothing! Pre-budget we, as quantity surveyors, would visit a property, regardless of its age, and re-value the plant and equipment items like carpet, oven etc. In essence, starting the depreciation process again.

The Government wanted to stop this continual revaluation of plant & equipment and this will be achieved by the new legislation.

As you can see from the chart above if you buy a property that was built prior to 1987, there will be no claim at all if the property is still in its original state.

Why? Well, the plant & equipment will be deemed as previously used, thus no claim applies and in order to claim the building allowance, the property has to be built after 1987.

However, this is very rare, as most properties built prior to 1987 have had some renovation to them, whether that be a new bathroom or kitchen and those costs are claimable.

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13. Can I still claim depreciation on plant and equipment on my holiday home if I use it twice a year?

This is the biggest grey area of all the legislative changes in my view and one that will require further clarification moving forward.

The Government in the Housing Tax Bill Explanatory Memorandum states that if a property is used in an “incidental way” or “occasionally used” then your depreciation eligibility on the Plant & Equipment does not stop if you acquired the plant & equipment prior to The Budget in May 2017.

Incidental Use is described as:

“Use is incidental if it is minor in the context of the overall use and arises in connection with another non-incidental use – for example staying at the property for one evening while carrying out maintenance activities would generally be incidental use.”

Occasionally Used is described as:

Spending a weekend in a holiday home or allowing relatives to stay for one weekend in the holiday home free of charge that is usually used for rent would generally be occasional use.

It’s a bit vague, isn’t it?

Does one week a year over Christmas nullify your claim? What about if you stay for Easter and Christmas?

What does this mean for all the Airbnb landlords out there that claim depreciation but move in when times are quiet but acquired the property prior to the budget? They went into that investment doing the maths on being able to claim the depreciation on a pro-rata basis based on the tax laws at the time?

Now if they use the apartment for an unknown time they may be disallowed the depreciation deduction.

Strangely, this Memorandum, differs from the ATO’s website which was updated on the 15th of December 2017 which indicates that “Gail and Craig” who use their property for 4 weeks a year can claim the depreciation? “Kelly and Dean” would appear to be ok as well!

Whilst the Memorandum doesn’t give a time frame… it indicates that a weekend is OK…I would’ve thought 4 weeks would’ve been stretching it?! Who knows – pick a number????

This is at a time when the ATO wants to target Airbnb hosts and pro-rata any capital gain tax exemption that may be applicable.

Go figure.

Hopefully, sense will prevail and if the holiday home is clearly available for rent – like 11 months over the year – it’s still an investment property.

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14. I have been asked this many times: “Tyron, what do you think about the changes?”

I agree that the constant revaluing of plant & equipment items on very old properties made no sense and needed refinement.

However, I think the approach the Government has taken in disallowing depreciation on properties that are near new doesn’t make a lot of sense and could’ve been rolled out far more logically.

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The Budget Change And How It Affects Our Rental Property

rental property

Dealing with your rental property post-budget change

 

Before the budget change investors were entitled to claim plant and equipment and building allowance, so long as the property was built post-1987 and the property had settled within 10 years of getting the depreciation report, even if they had lived in the property prior, post or during the purchasing of their depreciation report.

A common question regarding the budget change:

The other day I received an email from one of my clients asking me for some personalised advice regarding his investment property and depreciation report. He told me he and his wife had purchased their first home in 2011. It was not a brand new property, and between 2014-2016 they rented out the property with a full depreciation schedule, claiming all they were entitled to. At the start of 2016 they Depreciation Quote Schedulemoved back in to their home, and are now looking to renting it out again.

He was wondering if they are still eligible to claim the original tax depreciation schedule they purchased in 2014, or do they have to adhere to the new government tax depreciation rules since the budget change concerning the plant and equipment on established properties.

I thought this was a great question, and wanted to ensure all of my clients and readers were aware of the significant changes to the way second-hand, previously used assets are now being treated moving forward from the budget change.

The changes outlined:

As of the Federal Budget Announcement on the 9th May 2017, the Government has disallowed depreciation deductions on items such as Ovens, Dishwasher etc. where they have been previously used.

Whilst these new laws are grandfathered and as such are only applicable to properties purchased after the May 9th announcement, one caveat exists: The property must be income-generating at some point between July 1st, 2016 and June 30th, 2017.

This meant, that even though my client had acquired the property before the budget, they were unfortunately ‘caught in the net’ because they were living in their property for the entirety of the 2016/2017 financial year. Due to this, those aforementioned items would now be considered ‘previously used’ and they wouldn’t be entitled to claim any further depreciation on them.

The explanatory memorandum issued by the Government is a bit ambiguous (if you ask me):

Depreciation Calculator“The amendments also apply to assets acquired before this time if the assets were first used or installed ready for use by an entity during or prior to the income year in which this measure was publicly announced (generally the 2016-17 income year), but the asset was not used at all for a taxable purpose in that income year. “

 

Note worthy:

It’s worth noting that these new rules only apply to residential properties. Commercial, industrial and other non-residential property are not included.

It’s also important to note that the way residential property investors claim depreciation on the building has not been altered. You can continue to claim the depreciation on the structure (all the bricks, concrete etc.) provided the building was built after 1987.

Your Guide to Commercial Property Investment

Commercial Property Investment

If you’re looking to invest in real estate, commercial properties present plenty of opportunities. However, you need to consider the risks and market drivers. This commercial property investment guide will help you.

You must think about more than the property investment basics when investing in commercial real estate. There are many complex market issues at work, which means you take on more risk.

Understanding these issues will play a role in the success of your investment in real estate. Commercial properties come in all shapes and sizes, which you must account for. This commercial property guide will equip you with the tools you need to succeed.

The Market Drivers

Several drivers affect the state of the commercial real estate market. You must understand what these drivers are before you can invest successfully. They include the following:

The Risks

There are also several risk factors to consider when you invest in commercial property. Here are some of the most important:

The Lease

A poorly-constructed lease could lead to the failure of your commercial investment. These are the factors to consider when creating your leases:

What Else Should You Consider?

Depreciation CalculatorFurther to this, you need to arrange proper financing for your purchase. Many residential lenders can’t help you with commercial properties. As a result, you may have to locate a specialty lender. Furthermore, you may not be able to borrow more than 70% of the property’s value.

You’ll also deal with a commercial agent, rather than a real estate agent. These professionals specialise in attracting the right businesses to your property. They’ll also help you to create attractive deals for potential tenants.

The Final Word

As you can see, commercial investment is a complex subject. This commercial property guide will equip you with the tools you need to succeed.

The team at Washington Brown can also help you to claim depreciation on your commercial property. Contact us today to speak to a Quantity Surveyor.

Depreciation and Natural Disasters

Depreciation and Natural Disasters

Depreciation and Natural Disasters: Everything You Need To Know

A natural disaster could have a devastating effect on your investment property in Australia. You may need to get a new depreciation schedule to account for any repairs you make. Here’s what you need to know.

You cannot underestimate the effects natural disasters can have on an investment property. Australia deals with such disasters, and other issues, on a near-yearly basis. If such an issue affects your property, you may have to undergo a period of rebuilding. You’ll need to replace any assets you’ve lost, and possibly renovate or rebuild parts of your investment property in Australia.

This could make you wonder how natural disasters affect your rental property depreciation rates. On the one hand, you may have to pay out of pocket to bring your property back up to code.

After all, your insurance policy may not cover unforeseen circumstances. On the other hand, any improvements you make to the property improve its value. Your construction work could allow you to make more tax deductions. Australia has various regulations that ensure full compliance in such situations.

There are three situations you may find yourself in following a natural disaster. You’ll usually have to do at least one of the following:

 

You must approach each situation differently to maximise your ability to claim depreciation. Let’s look at each individually. 

Repairing Your Assets

Repairing an asset involves any work you undertake to bring the asset back to its original condition. This generally includes minor work only.  Depreciation Quote Schedule

If you make any improvements to the asset, you cannot claim it as a repair. This includes any physical changes to its appearance, or altering the asset’s functionality. These are upgrades, and you must treat them as such.

So, what can you claim for when repairing an asset? It differs depending on whether you have insurance.

If you have insurance, you can claim for the cost of repairing the asset. However, you must also declare any sum you received from your insurance policy. This will have a direct effect on your tax deductions. Australia does not allow you to claim the full cost of the repair if you have insurance.

However, those without insurance can claim the full cost. This is because you won’t have received any help in making the repair.

Replacing Your Assets

On the face of it, replacing an asset seems simple. If you can’t repair your previous asset, you must purchase a replacement. You can then claim for this replacement on your tax returns.

However, the issue of improvement comes into play again. The asset you purchase must have the same specifications and functionality as the damaged asset. Any improvements move the asset into the final category, which changes how you claim for it. Simply put, if the replacement isn’t like-for-like, it’s an improvement.

If you have insurance, you have to make several adjustments to your depreciation report. You have to account for both Capital Allowance, and Individual Depreciable Assets.

Those without insurance must scrap the depreciation value of the previous asset. Replace this with the new forecast for the replacement asset.

Making Improvements or Upgrades

Depreciation CalculatorAnything that improves the original asset is either an improvement or an upgrade. This includes changes to appearance and functionality. You may also have to claim on the asset as an upgrade if it has different specifications to the original asset.

So, how do you handle the depreciation? If you have insurance, you take the same action as you would when replacing an asset. Adjust your depreciation report to account for the Capital Allowance. Don’t forget the Individual Depreciable Assets either.

If you haven’t got insurance, you must get arrange a new depreciation forecast for your improved asset.

Working with a Quantity Surveyor

In all cases, work with a Quantity Surveyor to make your adjustments. These professionals will help you to forecast your depreciation tax deductions. Australia is home to many Quantity Surveyors, so do some research before selecting somebody.

The role your Quality Surveyor plays depends on your previous actions. If you had your property assessed before the disaster, your surveyor will make minor adjustments to your previous report. This costs less than a full report.

However, you will need a full depreciation report if you didn’t already have one. This takes some more time and money. However, the report will ensure that you claim all the depreciation you’re eligible for.

The Final Word

A Quantity Surveyor can help you to maximise your depreciation claims after a natural disaster. Arrange a survey as soon as possible to ensure you don’t lose more money than you have to.

Washington Brown maintains a team of expert Quantity Surveyors. Contact us today to find out more.

The Budget Has Changed The Game

The Federal Budget released on the 9th of May 2017 has changed the game for property investors. federal budget

The Government has changed the game in the new budget by reducing depreciation deductions for residential properties.

And it’s good news too if you ask me!

In this webinar, you’ll  learn the 9 key takeaways from these changes and how they affect you as a property investor.

Some of the budget topics we discuss include:

  1. If I have already bought a property can I still claim property depreciation?
  2. How will the changes affect my cash flow as a property investor?
  3.  How Tyron Hyde cracked the code and got around these changes – legally too!!
  4. What type of properties will still enable me to claim depreciation on the building? Can I claim on Industrial, Commercial, Holiday rentals etc?
  5. What entities are affected by these changes and what entities aren’t?
  6. What happens if I renovate a property, am I able to claim depreciation on those renovations? If I buy a property that has already been renovated, what happens?
  7. Perhaps the most interesting point to be discussed –  how will the unclaimed depreciation be treated when I sell the property and have to pay Capital Gains Tax?
  8. In light of the new laws – what types of property should I as a property investor be targeting?
  9. How is new property affected by these changes?

The property investment equation has changed and will become a lot more complicated in future years.

This is one webinar every property owner should listen to so that you have a better understanding of the financial equation before making an investment decision.

If you have an investment property and have not claimed depreciation, there has never been a better time to get a depreciation quote.

If you are unsure about how much you can save now in relation to your property investment – try our Free Depreciation Calculator

Choosing a Location: Everything You Need to Know

Choosing a Location

Our Location-Based Property Investment Strategies in Australia

You need to consider much more than the state of the property when buying an investment property in Australia. The location plays just as big of a role in your decision. After all, a property in the wrong location won’t attract any demand. With no demand, you can’t find tenants. This leads to an investment property in Australia failing to generate the income you expected.

So how do you choose the right location? There are several location-based property investment strategies in Australia that you need to keep in mind.

Mapping the Suburb

You should already have a general idea of how much you’re willing to spend on your new property. If you don’t, then organising your budget should be your first step.

However, let’s assume you already know. Now’s the time to start looking at different suburbs. What you’ll find is that the majority of suburbs have what some professionals refer to as “preferred pockets”. These are areas where the demand for properties is at its peak.

If you buy an investment property in Australia in one of these pockets, you should enjoy capital growth almost immediately. However, you can also use preferred pockets as part of a long-term strategy. As preferred pockets become more popular, so do the pockets around them. You could buy in a preferred pocket, while also investing in some of the less popular pockets around it.

As your preferred pocket grows, you’ll reap immediate rewards. However, you’ll also enjoy long-term rewards as the surrounding pockets become preferred pockets in their own right.

Read the Data

It’s not difficult to find organisations that can provide you with the sales data for the area you’re considering. You can use this information to track how much prices have grown or fallen in a location. Many reports even allow you to break this down by month or year, often up to a 10-year limit.Depreciation Calculator

So how can this help you? Firstly, it helps you to identify if the location is in an upswing or downswing. Ideally, you should avoid properties in areas that are about to swing downwards.

However, you could also take advantage of a downswing. If it looks like a location has bottomed out, you could buy a property in preparation for a rebound. The data will show you how likely this rebound is.

Check Infrastructure Trends

One of the best property investment tips for beginners is to track infrastructure trends across several locations. As a general rule, more infrastructure leads to higher house prices. After all, most people want to live in areas that offer easy access to amenities or the city.

The trick here is to look at what’s planned, rather than what’s already in place. Speak to local councils to find out what work may be planned in an area.

You’re looking for the “hot spots”. These are areas for which there are plans for infrastructural improvements that either haven’t started yet or are just beginning. Upon completion of those improvements, you should find that the demand for properties in those areas skyrockets. If you got in early, you can reap the rewards.

Avoid High Population Areas

This is one of the simplest property investment tips for beginners. The more houses there are in a location, the less demand you will experience.

It comes down to the basic concept of supply and demand. Property prices and rents fall whenever housing is in high supply. That’s because buyers and tenants have more room to negotiate because there are always going to be more options.

As a result, you should avoid areas with high populations. These tend to have a lot of supply, which means the demand is already met. Instead, look towards developing areas in desirable locations.

Check the Attractions

Depreciation Quote SchedulePeople buy or rent properties because of what the location offers as well as the property itself. This is where local attractions could shape your decision. A property that has a lot of nearby attractions will generally experience more demand than one that doesn’t.

So what is an attraction? On the basic level, you have things like creeks, beaches, and hiking trails. A lot of people like to have those things on their doorsteps, especially if they have families that they need to entertain.

However, you also need to consider the proximity of these attractions to the property. For example, let’s assume you’re buying a house near a beach. However, a freeway separates one set of properties from another. Those on the beachside of the freeway will command higher prices, often tens of thousands of dollars more than those for properties on the other side. In this example, it’s often best to invest in one of the lower-priced properties. They offer the same attractions, which means they’ll still be in demand. However, you pay less money to benefit from that demand.

 

Conclusion

You have to consider the location whenever you buy an investment property in Australia. After all, the location plays a huge role when it comes to the income you generate from the property.

Speak to professionals and find out as much information as you can. This will ensure you don’t end up buying in an undesirable location.

Commercial Space Deductions

claiming commercial deductions

Make Sure You Claim All Depreciation on Your Commercial Real Estate

If you’re thinking about buying commercial real estate in Melbourne, you need to prepare yourself. Many people fail to claim the commercial tax deductions in Australia that are due to them. This results in thousands of lost dollars.

You can claim for all sorts of things on your commercial real estate property. For example, you can claim deductions for the wear and tear of your fittings, furniture, and the structure itself. In fact, making the right deductions at the right time can affect cash flow. You can change a negatively geared property into one that enjoys a good cash flow.

So now you’re probably wondering how to maximise depreciation on your commercial investment property in Australia. Our guide will show you how.

Get the Ownership Structure Right

How you buy your commercial property is just as important as the type of property you buy. You need to have the right structure in place if you’re going to claim the maximum depreciation.

For example, you can increase your deductions if you buy the property using a trust. The same is true if you buy with your self-managed superannuation fund (SMSF). In both cases, you can split your deductions. You can make claims on the building as a standalone entity. Furthermore, you can also claim on any tenancy assets. However, you must operate a business in the property to do this.Depreciation Quote Schedule

Furthermore, you can claim for any capital works you undertake during your ownership. These can include extensions and many other general improvements. Finally, if you occupy the building as a business owner, you can also claim depreciation for any fixtures or fittings. Again, you must use these as part of your business operations.

Maintain Your Records

It should go without saying that it’s vital that you maintain accurate records if you want to claim commercial tax deductions in Australia. However, a remarkable number of people don’t do this.

Document every expenditure that relates to the building. These include both the immediate and ongoing costs. Furthermore, you should add day-to-day expenditure to the list. Keep anything that relates to a financial transaction involving your building. These records can help you to claim more.

Use a Quantity Surveyor

Every commercial property investor should employ the services of a quantity surveyor. These professionals can help you to create depreciation schedules. A good schedule ensures you can claim as much as possible on your property.

A quantity surveyor will carry out regular inspections of your property. These help to determine what deductions you can make each year. They’re ideal for long-term planning as well. A good depreciation schedule will lay out how to claim deductions for the next 40 years.

Furthermore, quantity surveyors understand how to maximise your depreciation based on your timeline. You may only intend to invest in the property for a short period of time. That’s okay. A good surveyor will take this into account, just like they would for a long-term investment.

It’s likely your surveyor will recommend the diminishing value method if you’re a short-term investor. This assumes the value of your assets depreciates most during their early years. As a result, you can claim for more depreciation in the short-term.

Depreciation CalculatorLong-term investors may prefer the prime cost method. This assumes uniform depreciation over the lifetime of your assets. As a result, you claim the same amount each year, rather than the bulk in the early years.

Which method works best for you will depend on the time commitment you make to your commercial real estate investment. A good quantity surveyor can talk you through the different timelines.

Take Advantage of the First Year

Your first year of ownership is vital. It’s when you will set up the structure through which you will manage your commercial property for the years that follow. Getting things wrong during the first year makes things more difficult than they need to be later on.

However, you also need to take depreciation into account from the moment you invest in the property. This is where your quantity surveyor can help again. You may be able to depreciate some of your assets faster with a commercial property than you would a residential one. Your surveyor will point this out to you. As a result, you can make more upfront savings using depreciation, which means you have more cash to use during that difficult first year.

The Final Word

Maximising your depreciation from a commercial property isn’t easy, but you can do it. Use the services of a reputable quantity surveyor and don’t put anything off.

Remember that you can make claims for depreciation from the moment you invest in the property. Don’t lose money because you were slow on the uptake.

Five Property Negotiation Tactics To Save You Money

Property Negotiation Tactics

Spend Less with the Right Tactics

Information goes a long way when you’re buying an investment property in Australia. Without information, you can’t prepare for the negotiations. This is when you sit down with the seller to try and find the right price for your investment property in Australia.

However, the information you have isn’t the only weapon in your arsenal. There are plenty of other tactics that you can employ to get a good deal. With that in mind, we’ve come up with five hot investment property tips for beginner negotiators.

Tip #1 – Learn as Much as You Can About the Seller

You may think the state of the property market would make it impossible to negotiate a good deal. If property prices are going up, it’s easy to assume that all sellers you meet will ask for more money.

However, this line of thought doesn’t take the seller’s situation into account. You need to find out everything you can about the seller when buying an investment property in Australia. For example, do you know the reason why the seller is getting rid of the property? If not, then you need to find out. Depreciation Quote Schedule

Many people sell because they’re in distressed situations. They may be in financial difficulties, or need to sell quickly to fund a new purchase. You can use this to your advantage and negotiate a better deal. After all, a motivated seller is one who will listen to lower offers.

Tip #2 – Sweeten the Deal

This ties into our first tip. Sometimes, a seller wants something really specific, which will make your bid for their investment property in Australia more attractive.

Consider the following example. The seller is currently going through a divorce. It’s a heartbreaking and emotional situation, but they really need to sell their property before the divorce is settled. As a result, that seller may be looking for a buyer who can help them settle the sale quickly, so they can get on with the rest of their life.

That’s where you come in. If you limit the terms attached to the transaction, you can speed up the process. That gives you some leeway to negotiate a lower price with a seller who wants to get rid of a property quickly.

Tip #3 – Get Pre-Approval on a Home Loan

Depreciation CalculatorSellers love serious buyers. If you enter negotiations knowing that you don’t yet have the money to make the purchase, you’re going to sour the seller to any offers you might make.

This means it’s best to get pre-approval on a home loan before you try to buy an investment property in Australia. Lodge your application and ask your lender to provide proof of the pre-approval.

You can then take this into your negotiations. Having pre-approval shows that you’re a serious buyer who wants to move forward. This will make the seller more willing to negotiate terms with you, which could be your pathway toward making a lower offer that saves you some money.

Tip #4 – Make the Right First Offer

The first offer you make on your investment property in Australia is crucial. Go too low, and you may insult the seller so much that he or she stops taking you seriously. Make a high offer, and you may end up spending more than you need to.

This is where your research is going to help. Find out how much similar properties in the same area are selling for. You can use this to get an approximate figure for the value of the property. Compare this to the seller’s valuation to ensure you’re both on the same page.

From there, you need to make your offer. It’s usually best to offer somewhere between 5 and 10% less than the seller’s valuation. This shows you’re a serious buyer, while giving yourself some wiggle room if the seller comes back to you with a higher figure.

Tip #5 – Don’t Mention Your Budget

Remember that your seller’s agent is going to try and extract as much information as they can from you. After all, they want to secure the highest possible price for their clients.

Talking to the seller’s real estate agent can offer you more information. However, it can lead to you giving away information that the seller could use against you.

The key is to not let the seller know how much you’re willing to spend. If they have that figure, negotiations are going to start at a much higher price than you had hoped for. Play your cards close to your chest, while still making offers that show you’re a serious buyer.