Analysis of the Budget Changes to Tax Depreciation on Plant and Equipment

Posted on May 10, 2017 by admin

UPDATED 11/5/2017

If you’re not already aware, last night’s budget announced some major changes to tax depreciation that will have a huge impact on quantity surveyors preparing depreciation schedules and residential property investors. I’ve been fielding calls and emails from accountants, investors and quantity surveying firm directors through the evening. There are two main ‘buckets’ of depreciation, there’s division 43 which relates to the structure of a building (concrete, timber, gyprock, tiling, cabinetry etc.) and division 40 which is plant and equipment items. Plant and equipment items are loosely described as items easily removed from the property without damage. Within a residential property, there are predominantly air conditioners, blinds and curtains, carpet, floating timber floors, ovens, cooktops, dishwashers, range hoods, hot water systems, security systems, smoke alarms and light shades. The list is quite long at around 150 individual assets, and apartment complexes will have a much larger list of shared plant and equipment items like lifts, fire indicator panels, swimming pool filters and the like.

The Government has just announced that there are now only two ways you’ll be able to claim depreciation deductions on plant & equipment items.

You buy a brand new residential property*;
You add the plant and equipment item directly yourself

This means that if you’re the second person to own a property, even if it’s only a year old, there will be zero depreciation deductions attributable to the plant and equipment items. This applies to residential investment properties where a contract was entered into from 7.30pm on the 9^th of May 2017. If you’ve purchased an investment property prior to that date, you’ll be able to continue to claim plant and equipment items until the values either run out, or you sell the property.

What does this mean in real terms for the depreciation deductions for property investors?

Thankfully we’d already begun an analysis of our last 1,000 residential depreciation schedules, albeit for a completely different purpose. Nevertheless, here are some of our key findings;

Of our last 1,000 schedules, 38.3% of them were purchased brand new and would be unaffected by the changes.
69.9% of the properties were built after the division 43 cut-off date of 16/9/1987, so there would be depreciation claimable on the original building structure
Of all the properties built prior to the cut-off date, 63.8% have been renovated to some extent by the current owner. The average total value of this renovation is $39,191

So the key takeaway is that if we remove from the 1,000 figure, all the properties that would benefit from a depreciation schedule (built after 1987, renovated to a significant extent by owner or previous owner) we’re left with 161 properties that would not have sufficient depreciation deductions to warrant having a depreciation schedule completed.

In some ways that’s good news for the industry, as 83.9% of investors will still have some worthwhile claims (at least $1,000 per year), and arguably the market for depreciation companies has not been cut in half. My cut-off point for ‘worthwhile deductions’ for those older properties was the average post-purchase renovation figure of $39,191, which I also applied to prior renovations.

If we look at an average $39,191 renovation, our analysis tells us to expect around $3,278 of that to be plant and equipment. Since plant and equipment depreciate at higher rates than the building structure, that has a big impact on the deductions in total.

Our analysis shows a first full year depreciation breakdown as follows:

Building Structure $897.83
Plant and Equipment $956.18 (under the diminishing value method)

As you can see, removing the plant and equipment deductions cuts the deductions roughly in half. Our analysis is slightly on the pessimistic side as it’s feasible a 39k renovation could have zero plant and equipment.

So according to MCG Quantity Surveyors analysis, whilst there’s still going to be enough value to justify a depreciation schedule in 83.9% of cases, the total benefit of the schedule will be diminished. Over our 1,000 residential schedules analysed, the average first year depreciation deductions was $9,407.73. For pre-owned investments only, that figure drops to $7,484.35. It’s reasonable to assume that around half of that value will be gone within the first year. On a 37% marginal tax rate, the after tax increased cost of ownership of your average established investment property will be around $1,300-$1,400 per year.

We urge accountants to direct investors to quantity surveyors to analyse the potential claims and caution property investors not to panic.

Do I think the 83.9% is a solid figure? Sadly not. The concerns is that investors will not chase their entitlements based on poor advice or misinformation about their entitlements. On the basis of 69.9% of properties qualifying for division 43 deductions on the original property, this is likely going to be closer to the true cut to the depreciation business. Of course again, misinformation may amplify the problem.

It’s a massive hit to property investors, but mostly to depreciation companies such as ourselves. The budget speech championed the role of investors in keeping rents down and providing accommodation to millions of Australians. This measure will increase the after-tax cost of holding a residential property and that cost will either be passed onto renters, or the supply of affordable rental properties will drop placing upwards pressure on rents due to demand.

This is a disappointing development and I urge the Government to consider the clear majority of investors that are simply holding one investment in the hope of self-funding their retirement.

*Some developers and quantity surveyors are concerned that plant and equipment items on new properties might be excluded. Given the intention of the measures was to stop investors from repeatedly depreciating old assets on the event of each new sale, I cannot see this happening. If you buy a new property, the assets have never been depreciated so the deductions should be available.

Mike Mortlock is a Quantity Surveyor and Director of MCG Quantity Surveyors. MCG Specialise in Tax Depreciation Schedules and Construction Cost Estimating for investors. You can visit them at www.mcgqs.com.au/

Timely reminder to home owners – Watersun Homes Collapses

Posted on March 2, 2017 by admin

The headlines are reading, ‘Home builder goes under, Thousands lost, Hundreds of home owners left out of pocket’.

The reality is that we have all read these headlines before and unfortunately, these brutal words will continue to feature from time to time within the construction landscape.

Building your home is a personal thing, whether it be the family home or an investment. Like our health, we live by the adage that ‘it will never happen to me’.

Wrong. As recent as this week, some 300 home owners are expected to be left out of pocket with the collapse of Watersun Homes.

As the Geelong Advertiser reported on the 1^st March, the directors of Watersun have gone into hiding, whilst the home buyers have been left in shock.

I expect the question on the minds and lips of many of the 300 home buyers after Watersun’s collapse will be, What to do next?

Know your numbers. What have you paid in construction cost progress payments to the builder? What is your cost to complete the construction works?. Then, are these numbers correct?

You may well have been paying the builder under a milestone method or staged method, similar to the below. However, that may well be very different to the ‘actual’ cost of the works completed to site.

For example on your $400,000 construction cost, you have paid the builder up to and including the frame stage. That is some 50% of the contract sum, $200,000.

However, what has actually been completed to site would be more in the order of 25% or $100,000.

Why? The above milestone method is front loaded to allow the builder to pay deposits for building materials, suppliers and subcontractors. In many cases, these deposits and building materials have not even been provided yet, or have reached site.

In a nut shell, you have $200,000 left as your cost to complete, but that will not be enough to complete the project, you actually would need closer to $300,000, plus the cost of a new builder establishing to site, engineer’s inspections, etc.

My advice? Contact a Quantity Surveyor to estimate the actual construction cost, then conduct a site inspection to determine the actual cost of the works completed and fixed to site. This will give you an accurate ‘actual’ cost to complete the development.

Secondly, you have the option of insurance. This is why it is vital that your home builder provides copies of these to you. I’m referring to Home Owners Warranty Insurance.

A word or warning though, going down the rabbit hole of insurance, will be a slow and at times, tedious process.

Choice, Australia’s leading consumer advocacy group, noted that:

“If your builder does go broke, die or disappear before the complaint is resolved and you have to resort to your home warranty insurance, it won’t cover legal costs against the builder. These costs can easily exceed the amount you’re attempting to recover – in one case cited by the Consumer Action Law Centre, a claim for $63,000 incurred about $90,000 in legal fees.

In addition, Choice went on to note “The Victorian Managed Insurance Authority has reported that Victorian homeowners paid about $87.8m in home warranty insurance premiums from May 2010 to May 2011, but only $108,000 was paid out on a total of three successful claims. Over the same timeframe, about 250,000 Victorians suffered damage at the hands of Victorian home builders”.

Thirdly, if patience can be maintained, a potentially better prospect will be to hold out and let the dust settle. There would be a good chance that a knight in shining armour is around the corner. This knight may be another building company willing to take on the task of finishing the buildings and continue to lead you on the path of having a completed project.

Regardless, knowing your numbers will be vital. If you are wanting to and willing to negotiate with the new builder, you will need to know what the ‘actual’ cost of the remaining works are.

My advice? Get hold of a qualified Quantity Surveyor and ‘KNOW YOUR NUMBERS’.

Marty is a founding director of MCG who specialise in traditional construction cost estimating and maximising the depreciation deductions for property investors and businesses across Australia.Marty has over 18 years experience in the building and construction industry. Marty has been called upon many times as an expert witness, sits on the interviewing panel for Australian Institute of Quantity Surveyors (AIQS) and works closely with financiers and developers across Australia.

The Melbourne Residences – Rippling Facades and Ripping Deductions

Posted on March 1, 2017 by admin

If there’s one thing we love, it’s repeat clients. Obviously, it’s great to do another schedule and that they trust us as the depreciation experts, but what excites us more is that our investor clients and building their portfolio and hopefully dramatically changing their retirement lifestyle in the process.
This repeat client bought a unit in South Brisbane. Before you retort with issues of oversupply, this development is a little different, in fact, the apartments sold out within 7 days.

We’re talking about the Melbourne Residences at 109 Melbourne Street, South Brisbane. This $105 million-dollar development consists of 178 residential apartments over 24 levels. Designed by Tony Owen Partners Architects, the development includes a resident’s rooftop club with a stunning pool, BBQ area, fitness centre, dining room and cinema with gold class theatre chairs.

According to the General Manager Mr Zeyad Imam, “The Melbourne Street façade is inspired by the rippled patterning which has its roots in the undulating shapes of the Convention and Exhibition Centre across Melbourne Street. The ripples across the façade offer a distinctive sculptural expression reflecting this prestigious site.”

The building was constructed using a concrete frame with post-tensioned slabs, a full glass and aluminium facade on the Melbourne St frontage and a Glass and concrete finish on the balance of the building.

As for depreciation deductions, the extensive common area and high standard finishes supercharge the depreciation claims for this development. The one bedroom apartments range from around $13,000 to $16,000 worth of deductions within the first full year of claim, with two bedroom and two bathroom units closer to the $20,000 mark within the first full year of claim.

Case Study – Ikebana luxury apartments, 130 Dudley St, West Melbourne VIC

Posted on January 5, 2017 by admin

It’s not terribly often we have a case study with a strong Japanese influence, let alone such a rich and detailed effort to showcase the majesty of the architecture. The word Ikebana translates as the Japanese art of flower arrangement and is an apt name for this stunning new development.

Ikebana luxury residences comprise of 248 Japanese inspired apartments. It consists of 133 two-bedroom apartments and 108 one-bedroom apartments and the Gurner trademark of extensive communal facilities. Designed by award-winning architects Elenberg Fraser, Ikebana is about the beauty and quietude of nature.

According to architects Elenberg Fraser, “the medium-density apartments celebrate the artisanal detail of Japanese handcrafts, with a torn paper façade and delicate screening. Integrated courtyards inject a natural connection – a tranquil moment of relaxation in an urban setting. With all apartments sold out, people were quick to snap up a piece of inner-city zen!”

The rooftop showcases the Ikebana Private Club featuring landscaping by renowned gardener Jack Merlo, a teppanyaki grill, karaoke lounge, indoor/outdoor lounge, a firepit and private dining areas. Merlo has also designed lush sunken gardens between the three buildings.

A unique feature of Ikebana is the two VIP Spa Retreats, which can be booked at no cost by residents for private entertaining with their own spa, barbecue, bar and moonlight cinema.

“When you want to get away with your friends for a rooftop barbecue overlooking the CBD, you don’t necessarily want to be there with everybody else so we’ve created these two spaces that residents can book for the night and take 10 to 20 friends up there,” says Gurner CEO Tim Gurner.

Two-bedroom apartments range in size from 54 to 79 square metres internally with balconies from seven to 49 square metres. They went to market from $511,000 to $750,000.

The one-bedroom apartments are sized from 45 to 46 square metres internally with outdoor space of seven to 36 square metres and prices from $360,000 to $480,000. Most apartments come with a car park, with 199 car spaces in the project.

We’ve been lucky enough to have been engaged by investor purchasers to provide depreciation schedules on Ikebana, and the depreciation entitlements are significant.

Investors purchasing smaller apartments in Ikebana can expect upwards of $13,000 within the first full year of claim, which isn’t bad for 40 odd square metres of internal living. Larger two-bed room apartments will achieve closer to $20,000, within the first year.

An estimate of the range of potential deductions for investor purchasers is shown below.

Tax Depreciation Calculators – Is there merit in the estimates?

Posted on December 20, 2016 by admin

Google is telling us that more and more people are searching for a ‘tax depreciation calculator’. Admittedly, this search ranked well below the top 2016 result of ‘US Election’ and even a few million short of number 6 ‘Pokemon Go’.

Putting the self-deprecating Quantity Surveyor stuff to the side for a moment, searching for an online depreciation estimate is a trend that’s likely to continue. Even so, we’re resisting the temptation to build a calculator. Why? I’m glad you asked.

Online calculators should be fairly accurate in calculating a tight minimum and maximum range for, say a brand-new project home. Yet comparing a few existing calculators online shows that the range between them is not particularly tight at all. I worry that there’s the potential to overpromise and under deliver, in the hope of winning the work.

The project home type property should be the easiest property to estimate of them all, let’s run through an example. (Strap yourself in, perhaps only engineers, accountants and depreciation guys will take pleasure in this.)

Firstly, we need to calculate the total construction cost. From a high-level perspective, the best way to do this is to take the size of the property, and apply industry rates at a cost per square metre. Note that we’re not considering the type of block (sloping etc.).

So, an off the shelf 2016 construction handbook would say a 180 sqm brick veneer home with a medium standard finish in Sydney would cost around $1,175 to $1,265 per square metre. This gives us a construction cost of $211,500 to $227,000.

Let’s assume the $227,000 figure is most accurate. With that we can calculate that it’s impossible to have less than $5,675 worth of deductions within the first full year. Why? Well, the minimum depreciation rate is 2.5% for capital works, so 2.5% of $227,000 is $5,675.

It’s impossible to have less than $5,675 in total depreciation deductions, because we’re talking about a hypothetical house without a toilet. Not just that, but air conditioning, hot water system, cooking appliances, carpets, blinds etc.

In my experience, a house of that value/type would have between $20,000 to $30,000 worth of these types of assets (plant and equipment assets).

This is where the depreciation gets a little trickier. Let’s say there’s $25,000 worth of plant, that means we now must deduct that from the construction cost to adequately calculate the capital works deductions. So, that would be $227,000 minus $25,000 = $202,000 X 2.5% = $5,050.

Then there’s the $25,000 worth of plant items. Some of it will depreciate at 100%, other assets at 18.75%, and some as low as 10%. Carpet will be 20% under the diminishing method and 20% is probably the fairest middle ground for all plant items. So again, trying to stay high level, we’ll call all plant assets 20% on average.

This will give us the following table;

Seems simple enough, and the capital allowances part almost is. Yet the plant and equipment assets will not decline in value the same way each year. Some assets will be gone completely, other assets depreciation rates may change once the value reaches a certain point. All these things must be ‘estimated’ and they make the year 2, 3 and so on calculations a little more complex.

On top of this, right at this very second, we’re completing a report on a 178 square metre home with an actual known cost to build of $365,000! How does the average investor know the standard of finish and even with Miele appliances and plush carpet, how can there be that much variation?

This is where a Quantity Surveyor cannot easily be replaced with a robot, despite some of the personality similarities, and we’re talking about a brand-new home after all. If we’re finding complexity here, how accurate do you think a calculator would be in one of these scenarios;

The client bought the property 15 years ago, it was 8 years old at the time but the previous owner added a deck and converted the garage into a home office.
The client lived in the property for the first 4 years, and wants to assess whether they’ll get sufficient deductions in financial year 5 on their 12-year-old unit in a complex of 78 units with a swimming pool and gym.
The property was built in 1996 in remote QLD and some materials needed to be brought in via a barge. The property was retiled and painted in 2011 after storm damage and has just had an extension to increase the size of the main bedroom and to build an ensuite.

I love the fact that property investors are now much more educated about their depreciation entitlements, us Quantity Surveyors have been educating people for years. It’s important though to understand the limitations of online calculators, and the inherent risk in relying on numbers calculated using a helicopter view and some average data. Once you get past the brand new house or townhouse, things can head in a myriad of directions and costs become much less predictable.

Nothing will beat an actual report prepared by an expert after a thorough site inspection and historical research. However, if you are looking to do your sums on a potential purchase or assess whether a depreciation report may provide some value over the cost, you’d be much better served picking up the phone or sending an email to a recognised tax depreciation expert. The more information you have about the property the better, and the greater the accuracy of any estimate.

Safe calculating!

Mike Mortlock, Managing Director – MCG Quantity Surveyors

Capital city dwelling values up, with pace of growth slowing.

Posted on November 16, 2016 by admin

Across the combined capital cities, dwelling values have increased by 7.1% over the 12 months to September 2016, a figure much lower than the 11.0% increase in values over the previous 12 months. So, whilst dwelling values certainly aren’t tracking sideways, the pace of growth has slowed markedly, yet is still relatively strong. Rental rates on the other hand, are falling and showing their largest declines in more than 20 years.

October dwelling values speak to this slowing pace, rising by 0.5%, compared with a 1.0% lift in September and 1.1% rise in August. The latest monthly housing market data takes the quarterly change in capital city dwelling values to 2.7% and 7.5% higher over the past twelve months.

Apart from Adelaide, Hobart and Perth, every capital city recorded a rise in dwelling values over the past three months, with the Canberra housing market recording the largest increase in values after a 5.6% quarterly rise. Growth in the Canberra property market largely relates to rising house values, with unit values increasing at less than half the pace of detached housing.

Index results as at October 31, 2016

Sydney continued as the stand out capital based on annual capital gains, recording the largest year-on-year increase; dwelling values are now 10.6% higher over the past 12 months. Houses lead the charge, with the supply side for high density housing taking up a lot of the demand. Units are in demand in so far as they are at a lower price point, but there are concerns around the number of dwellings coming onto the market.

According to CoreLogic economist Tim Lawless, the divergence in performance between houses and units is most clearly evident in Melbourne and Brisbane. The annual rate of capital gains in Melbourne remains strong at 9.1%, however there is a substantial difference in growth rates between houses and units, with house values up 9.6% compared with a 5.2% increase in unit values over the past year. Brisbane’s housing market has shown a larger capital gain spread, with house values up 4.7% compared with a 1.4% fall in unit values over the year.

He said, “The weaker performance of unit values across the Brisbane market may be partially attributed to supply concerns, as unit supply levels across key regions of Brisbane’s inner city show the potential for a significantly larger relative increase in existing stock levels when compared with Melbourne and Sydney.”

Melbourne Southbank’s Bella Apartments – A Depreciation Case Study

Posted on October 13, 2016 by admin

The iconic and aesthetically pleasing Bella Apartments is a landmark of Melbourne’s Southbank. We were delighted to prepare another depreciation schedule for one of the units just this week and thought it would be great to provide an insight into the development.

Salvo Property Group’s $55 million Bella is a 33 level tower comprising of 228 apartments in one and two bedroom configurations, including a gym and ground level retail tenancies. There are also three levels of car parking that contain a car lift and bike storage.

Some 200 people worked on-site during the construction of the Bella Apartments. It contains a number of ESD features including water efficient fixtures and appliances and energy efficient glazing which was used throughout.

From a depreciation perspective, it’s a great investment with extensive common areas and equipment including multiple lifts, gym equipment, sophisticated fire and security services with multiple parking levels.

Our clients 2-bedroom apartment was able to achieve over $1,000 worth of deductions per month for the first 18 months of ownership. This was the result of over $32,000 worth of total plant items across the unit and shared common areas and over $200,000 worth of depreciation on the shared common, and unit specific building structure.

To further illustrate the potential claims for investors in the Bella apartments with a similar unit, I’ve prepared an estimate below as a guide.

Good news for property investment co-ownership with split deductions.

Posted on October 12, 2016 by admin

The proportion of properties jointly owned is quite high, and with greater education on tax minimisation practices, we’re seeing a lot more obscure ownership percentages like 70/30 or even 99/1.

Why are people employing these types of ownership structures? It all comes down to which party can benefit the most from the deductions.

Take for example a couple who decide to invest in property. Person 1 earns $160,000 per year, and person 2 earns $45,000 per year. Let’s assume that between depreciation and the net loss on the property after rent and interest, there’s $30,000 worth of deductions across the whole property. The scenarios could be as follows in the 2015/2016 financial year;

The net result is that in scenario 2, the total tax saved for the couple is $10,903, as opposed to $8,720. So as a household, purchasing the property in shares of 95 and 5 per cent respectively, saved them an extra $2,183 together than it would have as 50/50 owners.

So apportioning the net losses to the highest wage earner is an effective strategy.

Depreciation schedules can also provide an additional benefit based on some key calculations for accelerated rates. Let’s look at two major ways in which deductions can be supercharged;

100% write-off – Assets (not part of a set) with an opening value less than $301.
Pooling – Assets with an individual opening or residual value of less than $1,000

Pooling rates are either 18.75% in the year of acquisition or 37.5% each year thereafter. Most assets that aren’t written off at 100% or pooling would depreciate at rates significantly lower than 37.5% such as carpet, which would depreciate at 20% each year under the diminishing value method.

Once we understand these main concepts, we can see how a split ownership structure can become beneficial.

Take carpet for example. If there’s $1,900 worth of carpet in a report owned by one entity, it would depreciate at 20% of its residual value each year. However, if the property is owned in a 50/50 structure, each owners portion of the carpet is worth 50% X $1,900, or $950.

Straight away, the carpet in each separate report would qualify for low value pooling rates of 18.75 in the first year, and 37.5% each year thereafter. There’s an additional advantage with pooled assets and the pro-rata calculation as well, but that’s another article!

Looking into the impact of split reports on assets under $301, let’s consider the property has one air conditioning room unit worth $580. As one entity, a room unit would qualify for the low value pool, but not as an asset that can be written off at $300 or less. However, with a 50/50 split, the asset is now worth $290 to each person, therefore allowing it to be an instant deduction. Each party will receive a $290 in the first financial year.

When we prepare these split reports, we prepare a master report showing the property deductions as one entity, and then the deductions in a separate report for each party. We’re often receiving calls from accountants asking why the figures don’t add up. The total deductions will be the same over the lifetime of the report, but the yearly deductions will be higher when spit apart, than what they would be together.

In a real world case study recently completed by our office, we had a very average property showing $2,144 worth of deductions within the 1^st partial year, and $2,015 in the 2^nd year. Under the split arrangement, the totals were $3,240 for the 1^st partial year and $2,009 in the second year. Essentially this couple we’re able to bring forward their deductions earlier, and we all know a dollar today is worth more than a dollar tomorrow!

CoreLogic dwelling values rise in September, RBA place doubt over previous figures

Posted on October 11, 2016 by admin

The month of September was a good one for capital city dwelling values, with all but Perth and Darwin trudging forward. Capital city values are also up 2.9% over the quarter.

On these figures though, there has been a lot of coverage of the inflated CoreLogic figures for April & May. In RBA governor Glenn Stevens’ statement explaining the most recent rate cut, he observed that “dwelling prices have been rising only moderately over the course of this year”.

That statement was at odds with CoreLogic data on home prices, released just the day before, that showed 6.1 per cent growth in home prices nationally, year-on-year, with much stronger results in Melbourne and Sydney.

The discrepancy was explained in the RBA’s quarterly Statement on Monetary Policy, realised on the 5^th of August, which relied on data from APM (part of Fairfax’s Domain property group) and the Real Estate Institute of Australia.

In the statement, the RBA explained that it has disregarded CoreLogic’s data because it appeared to significantly overstate price growth in April and May.

“While one source of data recorded strong growth in housing prices in April and May, that growth appears to have been overstated and other sources suggest that housing price growth was modest over those and more recent months,” the bank noted.

It appears that a methodology change by CoreLogic, implemented during April, may have contributed to higher index values in those two months than were warranted by actual transactions.

The RBA have noted that “the risks associated with high and rising household sector leverage and rapid gains in housing prices have diminished.” Septembers figures are shown below.

Index results as at September 30, 2016

Property in Scotland – Is it the next hot spot for you as an investor?

Posted on September 21, 2016 by admin

Pardon the tongue-in-cheek title, but the whole hotspot thing can be a little tiresome. We are much more in favour of long term fundamentals than volatile pockets and mining towns. What do we here at MCG know about the Scottish property market? Absolutely nothing! However, when one of our clients asked us to complete a depreciation schedule on their Scottish property, we were happy to oblige.

The property was in Menstrie, which is a village in the county of Clackmannanshire. It is about 8 kilometres east-north-east of Stirling and is one of a string of towns that, because of their location at the base of the Ochil Hills, are collectively referred to as the Hillfoots Villages or simply The Hillfoots.

The property itself was built by our clients in 2005. Thankfully we were furnished with a complete set of plans, as well as an on-site inspection with plenty of accompanying photos.

The property is a 4 bedroom detached two storey home with a beautiful bay windowed lounge. Whilst the property was constructed by a builder, our clients added plenty of value themselves such as carpets, floating timber floors, curtains, carpets, white goods and extra lighting. The extras totalled over $20,000 and whilst the clients could have claimed these assets with their accountant directly (as there was no estimating required), we rolled these assets within the greater schedule to give them a nice neat package moving forward. The main component was the original construction itself, which is providing over $6,000 worth of deductions per year.

The end result for our client was a potential back claim of just shy of $16,000 and a total depreciation figure for the 2015/2016 financial year of $7,282.

The perceived difficulty of having this report prepared, would certainly have delayed the clients in having the report prepared. However, as you can see, the deductions will benefit the clients greatly with a minimum of $6,000 of deduction each year right through to 2044. It’s reports like this that make it difficult to answer the question “Which areas do you cover?”

Category: Information