Unless your property is very unusual, there would generally be no need to speak to a quantity surveyor before purchasing a property.
While you’re hunting for potential investments, you can work out the estimated depreciation for a property by using Washington Brown’s free online depreciation calculator.
The ideal time for a QS to do an inspection is straight after settlement and just prior to the tenant moving in. This is to make sure that we don’t disturb the tenant and we also get to see exactly what you have purchased and the condition that it is in.
Jenny Jones owned a unit in a complex at Hastings Parade, North Bondi, which had substantial damage to the structure due to the elements (rain, wind, ocean spray, etc.). To fix the problem, the strata body raised a special levy of $80,000 from each of the six unit-holders and engaged a builder to carry out the work.
Once the building work was completed the strata manager engaged Washington Brown to differentiate between work that was capital in nature and work that was considered to be repairs.
In general, special levies raised are not deductible, but Washington Brown was able to break down the construction costs into repairs and capital works (i.e. eligible for building allowance depreciation). In the end, we estimated approximately $57,000 of the client’s $80,000 expenditure, or close to 80% of the overall spend, could be considered as an immediate deduction.
The client’s accountant thought this figure was too high and asked for a private ruling from the ATO.
The ATO ruling read as follows:
“The Tax Commissioner accepts the classification of the work carried out as per the report prepared by Washington Brown”.
Note to investors of strata-titled apartments: try to ensure your sinking fund has an adequate balance in order to avoid raising a special levy. Quantity surveyors also specialise in the preparation of realistic sinking fund forecasts.
The Australian Institute of Quantity Surveyor’s (AIQS) website www.aiqs.com.au gives a detailed description of the major works and services of quantity surveyors. The list is quite detailed and informative, so you may find it helpful when you’re considering whether to consult a quantity surveyor.
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