Quanity Survey/Depreciation Schedule - How do you know if its value for money?
- Thread starter womble66
- Start date
I would have liked to read the rant. I'm assuming you've had a bad experience. I hope it wasn't with us - let me know if it was.
In answer to your question:
Not always.
If you have a pre 85 built property with no renos and not many Assets, there might be $1,000 depreciation in the first full year, but I'm not sure it would be worth paying $6-700 for a Depreciation Schedule. Remember, when it comes to just Assets, a taxpayer can value them - the ATO's contention is that it requires no particular expertise to value, say an old stove. Give me a call Monday if you want me to explain this.
Anybody doing Depreciation Schedules should work out before they go there if it is going to be worth it for you. Lots of clients send us photos of properties and I get one of our guys to work out what might be the possible depreciation return before we take on the job. There are times when we turn down jobs.
Lots of companies don't send quantity surveyors to properties, either. I don't think that is ideal, but they tend to be cheaper.
Scott
In answer to your question:
Not always.
If you have a pre 85 built property with no renos and not many Assets, there might be $1,000 depreciation in the first full year, but I'm not sure it would be worth paying $6-700 for a Depreciation Schedule. Remember, when it comes to just Assets, a taxpayer can value them - the ATO's contention is that it requires no particular expertise to value, say an old stove. Give me a call Monday if you want me to explain this.
Anybody doing Depreciation Schedules should work out before they go there if it is going to be worth it for you. Lots of clients send us photos of properties and I get one of our guys to work out what might be the possible depreciation return before we take on the job. There are times when we turn down jobs.
Lots of companies don't send quantity surveyors to properties, either. I don't think that is ideal, but they tend to be cheaper.
Scott
Hi womble66, try a guesstimate first.
Eg construction cost [in the 80s, it's around $50K] now it's around $150K
other items eg curtains/carpets = big depreciation items around 10-20% pa.
light fixtures are also worth depreciating
Items under $1000 in costs + installation can go into the Low Value pool where it can be written down very quickly eg 37.5% [pls check this]
So if you have a total of $5000 to depreciate, & your tax is 30% then you get back $1500
The $600 you pay for someone to do the schedule is also tax deductible so you pay $420
You'll end up with $1080 and the schedule is used for the rest of the term you continue to own the property.
With new builds, you can use the building costs & there's no need to get someone to do it for you.
For a very old house with no built in furniture, I just estimated the 2nd hand cost of wardrobes etc [HWS usually around $950] & my accountant accepted it.
Hope this explanation helps you.
KY
Eg construction cost [in the 80s, it's around $50K] now it's around $150K
other items eg curtains/carpets = big depreciation items around 10-20% pa.
light fixtures are also worth depreciating
Items under $1000 in costs + installation can go into the Low Value pool where it can be written down very quickly eg 37.5% [pls check this]
So if you have a total of $5000 to depreciate, & your tax is 30% then you get back $1500
The $600 you pay for someone to do the schedule is also tax deductible so you pay $420
You'll end up with $1080 and the schedule is used for the rest of the term you continue to own the property.
With new builds, you can use the building costs & there's no need to get someone to do it for you.
For a very old house with no built in furniture, I just estimated the 2nd hand cost of wardrobes etc [HWS usually around $950] & my accountant accepted it.
Hope this explanation helps you.
KY
Just to explain what they mean by this is that you can only write off the 'building' component (which is the biggest component) if it was built from 18 July 85 onwards. BUT if it was built between that date and 15 Sept 87, then it is written off over 25 years (4% p/a) so is almost all used up now anyway. After 15 Sept 87 it is written off over 40 years (2.5% p/a) so in that instance it would definately be worthwhile getting a Quantity Surveyor involved.
If it was built before the 1987 date and it hasn't been renovated since then by a previous owner, then I agree that it's best to calculate the value of 'depreciable items' such as carpet & appliances yourself. You should check out this link on the ATO's website which lists the typical 'Residential' depreciable items. http://www.ato.gov.au/print.asp?doc=/content/46259.htm It is an older link, but they haven't reassessed this list since 2004 so it saves you looking through the latest list in TR 2010/2 which is 172 pages long.
I hope that helps.
Our experience - we bought a unit in Februaryh, which was built in the late 90's. We paid $600 for a depreciation report, and our depreciation and capital allowance deduction for the first year is about $2000.
The saving in tax at 30%, is $600 (2000 x 0.3), so the report has paid for itself in the first year.
So it was worth it for us.
The saving in tax at 30%, is $600 (2000 x 0.3), so the report has paid for itself in the first year.
So it was worth it for us.
Thanks Scott but it was more of a rant about my of lack understanding of the calculations rather than a rant about poor service by a cetain QS. I spoke to Hans today and all is sorted now I understand where the figures come from and once I had taken "non deductible" costs into account. Another happy customer.
Thanks KY. House was a 2006 build so as I was unsure of the build costs (now known as ~$215K), as there was many years of depreciation available this was main reason I went for an onsite QS. Cheers.
After 15 Sept 87 it is written off over 40 years (2.5% p/a) so in that instance it would definately be worthwhile getting a Quantity Surveyor involved. I hope that helps.
Yep as a 2006 build thats the reason I went for the QS. Thanks for the confirmation. Cheers.
Same here. Thanks,
Since we bought the property (built ~1975) we have not carried out any renos. We know that the kitchen and bathroom or only about 5 years old but we have no receipts or proof of this. Would depreciation still be applicable do you think? and would we be able to calculate the depreciation ourselves on kitchen appliances or seeing as we do not have receipts we cannot?
Thanks!
Thanks!
I presume the kitchen and bathroom were renovated by the previous owner? If so, you'd need to get a quantity surveyor to come out to inspect the works and they would value those works and any other works that you may be able to claim (like painting, etc). Would be worthwhile getting this done as the deductions you'd get would be a reasonable amount.
