Depreciation Schedule - Should I have one done ?

[LearningMan]

I have a quick question and wandering if the more experiences can help me out here ..

My wife and I own a IP ( 2 bedroom apartment in building > 25 years old ). When we moved in 5 years ago we upgraded just about every fixture in it. We lived in it for 3 years before then going overseas and renting it out.

Costs of renovations include the following :

New Kitchen inc. appliances : $7,500
Hardwood flooring : $7,000
Bathroom : $3,000
Light fixtures : $1,200
Door / Garage Locks : $600

What we have just realised is that we do not have a tax depreciation schedule and I am wandering if it's worth spending the $660 to have a quantity surveyor done one to include in this years tax return.

Appreciate advise ...

 

[skater]

I have found that it is always worthwhile to get a depreciation schedule, even in the older properties.

 

[see_change]

I have a quick question and wandering if the more experiences can help me out here ..

My wife and I own a IP ( 2 bedroom apartment in building > 25 years old ). When we moved in 5 years ago we upgraded just about every fixture in it.

Appreciate advise ...

If you have done work on a property and upgraded just about every fixture in it , then you can only claim depreciation on items you have an invoice for. If there was a substantial amount of the original fixtures insitu it might be worth it . The house is pre 85 so you can't claim building allowance.

We have three properties we did similar work on in logan , and after a discussion with Deppro were advised in this situation it wasn't worthwhile getting one done, simply because we already knew the value of what was in there. You can make up you own schedule or get your accountant to do one based on the costing of the work you did. The ATO Rental and Depreciation guides give you the info you need to do one.

The main reason to get the schedule is to have a justifiable value for the fittings in there at the time you bought the place.

The two properties we didn't have any work done on ( older , pre 85 , no recent reno's } have had Schedules done , and it was well worth the effort.


See Change

 

[Muz]

I agree we have an older property (built in the 60's) and a newer property (built in 1991) and invested in getting a Quantity Surveyor to do a report for both. Both came back with more deductions than we realised we could claim. We consider it money well spent.

 

[mckennal]

If you have done work on a property and upgraded just about every fixture in it , then you can only claim depreciation on items you have an invoice for.
See Change

So, in Learning Man's situation, where he didn't know they were going to rent it out, so didnt keep reciepts etc, he cannot claim any of those improvements? Not even if he gets a QS in to value them? That doesn't seem correct... Where is this spelled out on the ATO's site?

 

[see_change]

So, in Learning Man's situation, where he didn't know they were going to rent it out, so didnt keep reciepts etc, he cannot claim any of those improvements? Not even if he gets a QS in to value them? That doesn't seem correct... Where is this spelled out on the ATO's site?

Obviously a valid point you raise, though we can't assume he doesn't have the receipts. Personally I'm pedantic about things like that. If I've put in a new floor, I'll keep the receipt if there are problems further down the line, same as with Kitchen appliances / light fittings. If he has those receipts then he doesn't have a problem.

Why pay for a QS if you don't need one?

My comment re receipts was based on a conversation with Paul Bennion who is one of the senior people with Deppro in Brisbane . It's also backed up with my observation that now days the ATO like to see tax invoices, so his advice rang true with advice I've been given by my Accountant re ATO requirements in other areas.

I do note that the improvements were probably done pre Tax Invoices, and I'm not sure on what the impact this would have on LM's situation....

See Change

 

[LearningMan]

I have the receipts locked up in storage and don't have copies with me. I am currently living in Japan and will not be back until Christmas.

The reason for getting a quantity surveyor would be to get around this.

 

[keg75]

My account mentioned that I should get a depreciation schedule done on my country IP when I first bought it, obviously to make his job a little easier. He mentioned deppro but I couldn't find them at the time. I have now, and I have just sent them an email asking for a quote.

Does anyone know of any other companies (similar to deppro) that will work out a depreciation schedule on a property? They need to operate in WA.

ta keg75

 

[Aceyducey]

Does anyone know of any other companies (similar to deppro) that will work out a depreciation schedule on a property? They need to operate in WA.

From the Yellow Pages Online, searching for Quantity Surveyors in or servicing WA:
http://www.yellowpages.com.au/search/performSearch.do?headingCode=23116&location=3&businessType=Quantity+Surveyor&emailOnly=false&previousCopyPoint=false&resetCopyPoint=false&saveSearch=true&serviceArea=true&suburbList=&websiteOnly=false

Research a bit harder Keg.

Cheers,

Aceyducey

 

[keg75]

aceyducey

I didn't look for any as yet. I was going to get some names and go from there...plus i would have been looking for depreciation specialists not quantity surveyors (it was late when i posted this).

anyway - thanks for your tip.

keg75

 

[see_change]

So, in Learning Man's situation, where he didn't know they were going to rent it out, so didnt keep reciepts etc, he cannot claim any of those improvements? Not even if he gets a QS in to value them? That doesn't seem correct... Where is this spelled out on the ATO's site?

Went to SIG's Deppro talk last night and asked Paul Bennion, who had flown down from Brisbane this situation.

He said in your particular situation, where you have a PPOR that later turns into a IP, you could use a QS to give you a depreciation schedule, but he did suggest it would be wise to check with the ATO and get written confirmation of this prior to doing it .

He said that if a property is an investment property , then the ATO expects you to keep all the reciepts, and if you get audited and you don't have them you may have problems.

BTW , Depreciation can be claimed retrospectively for about three years

See Change

 

[LearningMan]

see change - thanks for the info. I will do a little more research with the ATO.

Thanks again.

 

[dwyerfam]

"depreciation specialists not quantity surveyors"

Is there a difference?

I just got a depreciation report done by a Quantity Surveyor (2 pages) where a previous DepPro report was about 10/12 pages. Am I missing something here?

Danny D.

 

[keg75]

dwyerfam

"depreciation specialists not quantity surveyors"

Is there a difference?

I wrote this, to point out to aceyducey that I would have been looking for something silly, I was showing my ingorance if you will. Try "depreciation specialists" and then "quantity surveyors" in the search engine of yellow pages and see what you get. you will be suprised.

I contacted a few places in Perth about a depreciation schedules and 2 came back asking for plans and one asked for photos aswell. Deppro said that they had a guy going to my town in a month and he could do the inspection etc then.

dwyerfam you said that deppro gave you 10-12 pages and the other gave you a 2 pages report. Are the reports fundamentally different ie does deppro space it out and pretty it up to make you more impressed, whilst only really showing what the 2 page mob did, or do they show an indepth breakdown of the depreciable items.

The reason I ask, is that Deppro will do up a schedule for me for $605 and they will do a physical inspection. The other 2 guys will be going off plans (1 wanted photos), one stated that it would cost a fortune in travel fees so said it wasn't worth my while (at least he was honest) but they were 550. I think it's worth pay 50 extra if they are actually going in the house. I was going to ask them to price match - they may accept that.

Can anyone post a pdf or doc of a page to show what they will provide as I have never seen one before. maybe dwyerfam you could show the difference between your two.

thanks keg75

 

[Aceyducey]

"depreciation specialists not quantity surveyors"

Is there a difference?

Deppro IS a quantity surveyor.

You'll not find the category 'Depreciation specialist' in the Yellow Pages.

It's a skillset within a profession. The profession is Quantity Surveyor.

Naturally some will be better than others - the forum is good for screening in or out the best ones

Cheers,

Aceyducey

 

[dwyerfam]

dwyerfam you said that deppro gave you 10-12 pages and the other gave you a 2 pages report. Are the reports fundamentally different ie does deppro space it out and pretty it up to make you more impressed, whilst only really showing what the 2 page mob did, or do they show an indepth breakdown of the depreciable items.

Keg75,
I dug up my DepPro report and have to say that yeah, DepPro's report is all spaced out and made pretty (Covering letter, cover sheets etc).

Can anyone post a pdf or doc of a page to show what they will provide as I have never seen one before

Here's a sample of a report (see attached) that I downloaded from a website (can't recall which) some time ago.

 

[Peter 14.7]

Deppro seems OK

The reason I ask, is that Deppro will do up a schedule for me for $605 and they will do a physical inspection. The other 2 guys will be going off plans (1 wanted photos), one stated that it would cost a fortune in travel fees so said it wasn't worth my while (at least he was honest) but they were 550. I think it's worth pay 50 extra if they are actually going in the house. I was going to ask them to price match - they may accept that.

Can anyone post a pdf or doc of a page to show what they will provide as I have never seen one before. maybe dwyerfam you could show the difference between your two.

thanks keg75

Hi Keg

I was at the SIG meeting where Depro presented. I was impressed with their honesty and knowledge. For example I outlined both properties I owned and they told it would not be worth it on one being built prioir to 1985 and small. We also asked some curly questions and they did not BS.

Being tough somersoft fourumites we put the screws on them and got:

an agreement to a fee of only $440 inc GST for forumites so try that one.

an offer to draft review via email any property to tell you if it was worth while

a commitment that if the schedule did not return 3 times its costs (around $1200) they would not complete and they would not charge for it.

The presenter was:

Bernie Roth
[email protected]

In summary, they seem to know their stuff!

Regards, Peter 147

 

[see_change]

I'd agree with Peter re Deppro.

On Rixters recommendation I talked to Paul Bennion re schedules in the Past. I have Seven properties in Logan , and after our discussion , he recommended that only two were worthwhile getting Schedules done on. He spent quite a while talking to me and was most helpfull.

I know several people on the forum who have used their schedules, and I've heard nothing but good comments about them.

See Change

 

[geoffw]

I had a job done by a QS (not Deppro) where several thousand dollars of depreciation was just forgotten.

When I pointed this out, he went back to his notes, and realised that he had written down this things, but had just forgotten to include them in the schedule.