Depreciation for new townhouses

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From: Peter Vranes


I'm presently looking at a few townhouses and am not too sure what i should include for depreciation of fixtures and fittings. For one of the properties the agent has provided a depreciation schedule with the fixtures and fittings at about $7,000. This seems very low considering the asking price is around $380,000. Can anyone give me an indication as to what the value of fixtures and fittings are for new townhouses?
 
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Reply: 1
From: Marina. L




HI,

You need a Depreciation schedule made up by a Quantity surveyor.
You can find one in the yellow pages..

MARINA
 
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Reply: 1.1
From: Rasputin .


How much does a good QA charge?? How do you know if he is a good one or is their a standard they all work too
 
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Reply: 1.1.1
From: Peter Vranes


The problem is when i'm looking at a potential property to purchase often the builder does not have a depreciation schedule and it would be too costly to get a quantity surveyor to provide it given that i may not purchase the property.

Any ideas as to the "normal" value of fixtures and fittings for the purposes of depreciation on say a new townhouse around the $350k mark?
 
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Reply: 1.1.1.1
From: Sue J


Another question....is it still viable to get a quantity surveyor in months or even years after the purchase of an IP?
We weren't aware of them years ago.
Thanks
Sue
 
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Reply: 1.1.1.2
From: Paul Zagoridis


Hi Peter

Under the new tax system the rules have changed. You now need to depreciate over the useful life.

I keep a checklist of depreciable items and values from another property and use it as a guide. Eventually you get an idea of what it'll be worth to you (but you'll need the QS sched once you buy it).

This is very similar to estimating values in an area. You could get a valuer, but sooner or later you get a feel for these things.

Also depreciation alone would not make a deal stack up. Depreciation is a tax adjustment. If the cashflow on a property needs depreciation to make it work for you - find another property.

>Any ideas as to the "normal"
>value of fixtures and fittings
>for the purposes of
>depreciation on say a new
>townhouse around the $350k
>mark?

Go get dep. scheds for a couple of these of similar finish. The amount of common property is significant in this as well.

Regards

PaulZag
 
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Reply: 1.1.1.1.1
From: Dale Gatherum-Goss


Hi

Yes! Yes! Yes!

The QS report will open up many tax deductions that will pay for the report many times over. It is money for nothing that makes the return on your investment even better again!!

And, if you get the report your accountant can lodge amended returns for the last four years to claim back any "lost" tax refunds that you might have missed thus far.

I hope that this helps.

Dale
CPA
 
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Reply: 1.1.1.2.1
From: Rixter ®


I use a Quantity Surveyor and can highly recommend their services.....only if you are buying a new or near new IP

For a little under $400 I get a 40 year depreciation report that itemizes and lists every fitting/fixture in the property and depreciates it plus it also itemizes my capital building costs for depreciation...all I do then is give it to my accountant for my yearly tax return .

As a general rule of thumb it gets me back at least a miniminn of 50% of the purchase on the Ip just in non-cash depreciation deductions alone, plus all the other usual cash deductions in my outgoing expenses on to of that.

Employing the services of QS is mandatory if you are to claim back every single tax deduction that your entitled to.

Its a real shame but the Problem is without a QS there is literally Millions of $$ going unclaimed each year by investors purely because many of them have never even heard of QS and are unaware of what they are exactly entitled to claim back.

Happy Investing
Rixter
 
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Reply: 1.1.1.2.1.1
From: Rasputin .


The cost of $400 is fine if you are actually going to buy the palce, but what if you are jsut looking to see if place is viable, surely you guys dont pay $400 each time you look at a property, you must use some form of "rule of thumb" and then if you go ahead get a quality report later???
 
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Reply: 1.1.1.2.1.1.1
From: Dale Gatherum-Goss


Hi

No, this is done after the contracts have been exchanged and settlement occurs. However, you can often get good information from the vendor and agent if they are keen to sell.

Dale
 
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Reply: 1.1.1.2.1.1.1.1
From: Sue J


So what you are saying is it is not worth getting for a property 25 yrs old that has had a little cosmetic surgery(ie paint & gardens)
regards
Sue
 
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Reply: 1.1.1.2.1.1.1.1.1
From: Rixter ®


As a Rule of thumb a QS report is a viable proposition if you are buying a new or near new property..the definition of new I go by is within 6 years old.....

The reason for this because the majority of your depreciation is calculated on a diminishing value method whereby the majority $$ is claimed in higher annual alotments for the first 9 or 10 years, after that the figures get lower thus the term deminishing...thats why new or near new is best..it more financially rewarding in terms of depreciation $$ claimable....

Having said that if you still buy older than 10 years , its still will recoup far more Tax back in depreciation than you would spend in getting a QS report .....keeping in mind the tax rule applies to Ip built from 1985 onwards so prior to this, zip!

Capital depreciation is claimable at 4% for 25 years on Ip built between 1985-1987, then from 1987 onwards at 2.5% for 40 years

The only other viable method of using a QS on older property is if you do a total refurbishment on it..then you can claim the depreciation on all your new fittings/fixtures you have installed.

Hope this has helped

Happy Purchasing
Rixter :)
 
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