Staying Under the ATO’s Radar

Compiling the report properly

A depreciation schedule on your investment property can generate significant tax savings – as long as it has been complied correctly.

In my experience there are three main areas the Australian Tax Office tends to target come tax time.

1. Repairs and maintenance

One of them is whether you’ve claimed repairs and maintenance correctly. Now this can be tricky…

2. Income producing

Your property must also be income producing in order to claim depreciation.

For instance, if you make a repair while living in the property, then move out 2 months later, you can’t claim it.

ATO

3. Building allowance

The third area of concern is in relation to the building allowance.

The building allowance refers to the wear and tear on the actual building – things like bricks and concrete. You have to make sure they’re being claimed in the right Depreciation Calculatorcategory and not alongside items like carpets and blinds, which are considered plant and equipment.

The building depreciation allowance must also be claimed on construction costs – NOT the purchase price of your property. A mistake I see time and time again.

That’s where we can help! The Australian Tax Office (ATO) recognises Quantity Surveyors as the right people to estimate these costs. NOT valuers nor real estate agents.

Follow these rules

So there you have it. Make sure you follow these simple rules to stay under the ATO’s radar;

If you need a depreciation schedule for your investment property – get a quote here or work out how much you can save using our free calculator.

How to Stay Under the ATO’s Radar…

Learn how to stay under the ATO’s radar by watching this video

A depreciation schedule on your investment property can generate significant tax savings – as long as it has been complied correctly.
In my experience there are three areas the ATO tends to target come tax time.
One of them is whether you’ve claimed repairs and maintenance correctly. This can be tricky. Depreciation Calculator

Your property must also be income producing in order to claim depreciation.

For instance, if you make a repair while living in the property, then move out 2 months later, you can’t claim it.

The third area of concern is in relation to the building allowance.

The building allowance refers to the wear and tear on the actual building – things like bricks and concrete. You have to make sure they’re being claimed in the right category and not alongside items like carpets and blinds, which are considered plant and equipment.

The building depreciation allowance must also be claimed on construction costs – NOT the purchase price of your property. A mistake I see time and time again.

And that’s where we can help. Quantity Surveyors are recognised by the Australian Tax Office as the right people to estimate these costs. NOT valuers nor real estate agents.

So there you have it. To stay under the ATO’s radar, make sure:

Your repairs are being claimed correctly
The property is an income producing asset
The building allowance is based on the construction cost.
And most importantly, use a qualified quantity surveyor.

If you need a depreciation schedule for your investment property – get a quote here or work out how much you can save using our free calculator.

Is it a Repair or Capital Improvement

To Repair or Not to Repair – That is the Question!

Repair or Capital Improvement

Is it a Repair or Capital Improvement

When you renovate a property, the builder will generally supply a Tax Invoice that outlines the amount owed and an overview of the work carried out.

If part of the work carried out is deemed to be a repair in nature, you can claim the total cost of the repair as an outright deduction.Depreciation Quote Schedule

BUT, if the work carried out is deemed to be a capital improvement – you must claim the cost of the work over 40 years at a fixed rate of 2.5% per annum.

Unfortunately, the determination of these works is not always straight forward.

So how can you determine whether it a repair or capital improvement?

The correct classification of the renovation can make a big difference to the bottom line for a property investor.

Generally, a builder is not thinking “How can I itemise this Tax Invoice in order to maximise my clients’ tax return?”.

That’s where Quantity Surveyors can help!

Quantity Surveyors, in my opinion, are well placed to assist in the determination of capital works items versus repairs, potentially saving property investors thousands.