When you are looking at ways of improving your cash flow and building assets via property investing, take a moment to consider some of the ways a good quantity surveyors report on your properties can help in this regard.
What is depreciation?
As a building gets older, items wear out – they depreciate. The Australian Taxation Office allows property owners to claim this depreciation as a deduction. Depreciation can be obtained by any property owner who obtains income from their property.
There are several factors for consideration that will enable the property owner to maximise tax depreciation benefits including:
- The age of the property: Both new and older properties will attract some depreciation deductions
- The type of property: Quantity surveyors offer tax depreciation reports on residential, commercial and industrial investment properties.
- Adjust previous tax returns – The Australian Taxation Office (ATO) permits two years tax returns to be amended, this may result in the ATO paying you money that you missed out on in previous years.
When is a good time to call in a quantity Surveyor?
- When you first purchase – a QS report will take a snapshot of the building, fixtures and fittings and provide you with a document on which the accountant can base depreciation figures and which is accepted by the ATO as an expert’s report. Our finance team certainly notices when we assess your tax returns which properties have a QS in place. Generally tax deductions from depreciation are noticeably higher and the end result in reducing tax payable is often very obvious. This makes a real difference to the amount of cash you then have in hand to use as you see fit.
- When you renovate – Call the quantity surveyor and ask them to come and inspect the property BEFORE you begin to demolish parts of it or take out any fittings. The QS can provide a “Scrapping Schedule” which records the value of the items and elements of the building that you are taking out and probably trashing. These items can be recorded as a loss item against that property in your tax return and this again reduces your taxable income.
- On completion of a renovation (or construction) – Obtain a fresh QS report. Renovated parts of your property will have a new start point in your building depreciation and old scrapped items will be replaced by the new fixtures and fittings you have installed.
- On sale of a property – If you can produce on sale QS reports that have been done when you first owned that property, they can impact in reducing the capital gain you report on sale of that property. Again, you then probably pay less tax and retain more cash from the sale.
In short, bringing in a good quantity surveyor to report on your property means that generally you pay less tax!
Every investment property should have a tax deprecation report completed on it. By unlocking the cash flow potential in your investment property – you could be saving thousands of dollars every year.
Chan & Naylor Finance have obtained a special offer from a very experienced quantity surveyor. It’s an offer that has been made by BMT Quantity Surveyors. They specialise in maximising depreciation deductions for investment property ownersAustralia wide and have 11 office locations which means that our clients in all states can access their services.
BMT work with our accountants to ensure investment property owners are maximising depreciation deductions which allows them to pay less tax!
Chan & Naylor customers are entitled to the reduced fee of $660 incl GST – regular fee $715 incl GST.
Shoot us an email on firstname.lastname@example.org if you would like to contact them to discuss obtaining a QS report. We’ll put you in touch with them.
Director, Chan & Naylor Finance
If you intend to rely on any of the information in this document to satisfy liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law, you should request advice from a registered tax agent. This information does not take into account your individual objectives, financial situation and needs. You should assess whether the information is appropriate for you and consider talking to a financial adviser before making an investment decision. The information contained in this document is given in good faith and is believed to be correct at the time of publication, but no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors or omissions (including responsibility to any person by reason of negligence) is accepted by Chan & Naylor, its officers, employees, directors or agents.