Depreciation on old properties?

[oliver]

Hi,

I am new in this forum, but find this forum is very good and provide much information on property investment. Very happy to be a member.
I just bought an old property, maybe 40 years old so I am not sure whether to call a quantity surveyor to get a depreciation schedule.
1. For 40 years old property, is it worth to get a depreciation schedule? Normally how much I can depreciate? I can see the roof and the fence are a bit new, not sure how new, maybe 10 years.
2. Normally how much should I pay for the quantity surveyor?
3. If it is worth, can anyone kindly recommend someone? The property is in Melbourne western area.
We also had other IP, all old houses, our account said it is not worth to do that, so we didn't get any depreciation. This time I think maybe we should.
Thanks in advance.

Oliver

 

[DaleGG]

Hi Oliver

I would recommend that you have a chat to at least one Quantity Surveyor. A good one, such as a couple of the gentlemen who visit this forum will be able to ask you questions and then be honest in their evaluation abgt whether getting them out, or not, is a good idea.

My experience is that it is generally a good idea to get one done when they suggest that it is.

Each property will prooduce different results in how much can be claimed and so there is no answer here to your question about the amount of the benfits that will be available. It will depend upon how much has been spent on the property and when it was spent.

A QS will cost you between $400 and $700 usually. It is tax deductible.

I ahve used BMT & Assoc as well as CMR & Assoc and can recommend both. I ahve also seen the reports prepared by the QS involved in this forum and feel comfortable with recommending the, too.

Have fun

Dale

Hi,

I am new in this forum, but find this forum is very good and provide much information on property investment. Very happy to be a member.
I just bought an old property, maybe 40 years old so I am not sure whether to call a quantity surveyor to get a depreciation schedule.
1. For 40 years old property, is it worth to get a depreciation schedule? Normally how much I can depreciate? I can see the roof and the fence are a bit new, not sure how new, maybe 10 years.
2. Normally how much should I pay for the quantity surveyor?
3. If it is worth, can anyone kindly recommend someone? The property is in Melbourne western area.
We also had other IP, all old houses, our account said it is not worth to do that, so we didn't get any depreciation. This time I think maybe we should.
Thanks in advance.

Oliver

 

[WashingtonBrown]

1. For 40 years old property, is it worth to get a depreciation schedule?

It really depends on the property - whats there condition price etc.

We guarantee to save our clients twice our fee in the first full year or its free....so it would be worth investigating. That said, we dont often go to the property without pre-screening...as we dont often give out free reports!!

Normally how much I can depreciate? I can see the roof and the fence are a bit new, not sure how new, maybe 10 years.

This will all help

2. Normally how much should I pay for the quantity surveyor?

I would say more the upper end of Dales range....if you want someone to visit your property in accordance with AIQS guidelines.

Regards

 

[Cheeks]

Hi

Ok, I have a 1913 cottage that I recently had a schedule performed on.

The property has a hot water system, aircons (4), and newish front garden wall, new front gate and a new side fence. Floors have been refinished and the rooms have been painted. The kitchen seems to have been updated in the sixties and the bathroom has been refurbished.

My schedule was performed by Deppro and they charged me around $400 and goes until the year 2045.

Some allowance figures are (diminishing value):

05-06 = $2969
06-07 = $3416
07-08 = $2857
08-09 = $2404

I would recommend having a schedule performed on any property as you never know until you ask

 

[oliver]

Thanks everyone for the information.
Now I am thinking I should also get my other house check and get the schedule. This one was bought in May 2003 and settlement in Sep 2003. If I get the schedule now, will I be able to do the tax amendment back to 03-04, 04-05?

Oliver

 

[depreciator]

Yep.

But you'd need to get a rough idea of the likely depreciation as you'll have to pay your accountant to amend those previous returns i.e. you'll want to make sure things stack up.

 

[Cheeks]

I have also heard on the grape vine that a sure way of getting audited by the ATO is to amend previous years tax returns based on depreciation, so think about it before doing it.

 

[WashingtonBrown]

I have also heard on the grape vine that a sure way of getting audited by the ATO is to amend previous years tax returns based on depreciation, so think about it before doing it.

I wouldnt let this statement deter investors.

If you have incorrectly underclaimed, or worse not claimed, your depreciation on a building you are entitled to amend your return.

Unless of course you have other things to hide!!

Having a report professionally prepared will assist your case.

Regards

 

[Mry]

If a client has a fully prepared tax return vetted via a tax agent, you have nothing to fear from audits .... well, except auditors who don't know tax law.

I recently read a Money Mag article about claiming depreciation on old properties. A Tyron Hyde mentioned that "a unit built in 1972 can also be worth $1,500 in 2000 in tax breaks."

Always best to vet depreciation potential on your pre-85 properties with people who reduce their fee should the claim be not worth pursuing.

 

[WashingtonBrown]

If a client has a fully prepared tax return vetted via a tax agent, you have nothing to fear from audits .... well, except auditors who don't know tax law.

I recently read a Money Mag article about claiming depreciation on old properties. A Tyron Hyde mentioned that "a unit built in 1972 can also be worth $1,500 in 2000 in tax breaks."

Always best to vet depreciation potential on your pre-85 properties with people who reduce their fee should the claim be not worth pursuing.

Hi Mry ....

Dont quite get your post. But a Tyron Hyde is me - Washington Brown!!!!

And heres the article in its entirity.

http://www.washingtonbrown.com.au/news.htm

Further i have no problem with re-stating these facts.

Indeed, i think the highest claim i have ever signed off on a freestanding house.....built in the 50's was approx. $8k in the first year. I kid you not.

BUT BUT that house was cut into 4 ...had four kitchens (and appliances) about 12 a/c units, s hite loads of fans etc etc...

It was on Horn island - and that kind of property revolves around "cooling" the tenant or owner. THUS lots of depreciation.

Futher it was yielding about 10% before we issued our report.

Regards

 

[Cheeks]

Quote:

Originally Posted by Cheeks
I have also heard on the grape vine that a sure way of getting audited by the ATO is to amend previous years tax returns based on depreciation, so think about it before doing it.

I wouldnt let this statement deter investors.

If you have incorrectly underclaimed, or worse not claimed, your depreciation on a building you are entitled to amend your return.

Unless of course you have other things to hide!!

Having a report professionally prepared will assist your case.


Regards

It still however is a point worth considering.

 

[WashingtonBrown]

It still however is a point worth considering.

You are right....

But in my view....if i had listened to every....

"Tip" or "Grapevine"

I would be in a considerably worse place than i am now.

I guess each to their own.

Regards

 

[Cheeks]

Don't be too harsh WashingtonBrown, just making a comment.

Actual heard this comment from a few accountants and surveyors in WA that had previous experience of it happening.

So I'm just passing on information and experiences. Because for me a $1000 isn't worth the pain of an audit and not because I have anything to hide, because of all the paper work involved

 

[DaleGG]

Hi

I would not agree with this statement.
Having said that, I would not normally recommend amending prior year tax returns unless the pay off was worth while given the risks and costs involved.

Dale

I have also heard on the grape vine that a sure way of getting audited by the ATO is to amend previous years tax returns based on depreciation, so think about it before doing it.

 

[Mry]

Dont quite get your post. But a Tyron Hyde is me - Washington Brown!!!!

I know! I was teasing you (in a friendly way)! Sorry!

Thats some interesting info by the way.

 

[WashingtonBrown]

Don't be too harsh WashingtonBrown, just making a comment.:

Sorry if u thought i was being harsh. Didnt mean to be.

And u r right...if only a $1k total difference - prob not worth it.

We have had many clients, however, where the difference has been vastly greater.

The worst was a client, i kid you not, who bought $5m factory 10 years ago - brand new - and had not claimed a cent.

He was as happy as he was sad...when he realised he had missed out on about $500k in deductions (first 5 years)...but could now claim about $400k for the last 5 years.

So i guess my point was coming from hearing over the last 15 years...so many clients dissapointed in not knowing these allowances....then sometimes hearing the joy that they can amend a return - if not all returns.

Again didnt mean to offend.

Regards

 

[WashingtonBrown]

I know! I was teasing you (in a friendly way)! Sorry!

Ok - hehehe i get it (bit slow)...thought i had entered some freaky time warp.

Regards

 

[oliver]

Hi,

So if do the schedule now for the IP I bought in 2003, and I don't want the tax amendment, can I claim the depreciation for 05-06 and on?

Thanks.
Oliver

 

[depreciator]

Yep. But the Assets in the property started depreciating from when you bought the property, so you have forfeited some depreciation. (I recall your property is too old for the building write-off.)
As others have said, any decent Depreciation Schedule provider will be able to work out whether it's worth your while proceeding i.e. if there will be sufficient depreciation to justify the fee.
Scott

 

[Mry]

As others have said, any decent Depreciation Schedule provider will be able to work out whether it's worth your while proceeding i.e. if there will be sufficient depreciation to justify the fee.

That's worth highlighting in bold. I received a depreciation schedule for a rental owner and all he could claim was $200 for the first year and less going forward. That was a Deppro schedule from memory. I'm not saying Deppro aren't decent, I'm just pointing out that you do need to ask going in if it is worth it (because plainly, that schedule I got was a waste of time and money).