Renovating a block of units

[capitalist]

Hi all, i've begun to renovate a block of 5 units and have started a spreadsheet to keep track of the cost of repairs/maintenance.

My accountant has told me that any repairs/maintenance on the units in the block should be seperately invoiced for tax purposes, so my spreadsheet has a seperate worksheet for each unit where i enter details of any repairs/maintenance as they arise.

I've just fully renovated one unit as it became vacant, and have installed new cisterns and light fittings in 3 of the others. This is straight forward, as i simply enter these costs into each worksheet.

However i've just started to tidy up the common areas and intend to do some paving, decking, gardening, new clothes lines, rubbish bin area, letterboxes and painting the exterior.

I'm wondering where i should enter the cost of this?

Should i equally spread the costs around to each unit, or do i enter them in a seperate worksheet specifically for the common areas?

Thanks for any comments.

 

[geoffw]

Yuk- I hope I don't have to do it for each unit (I have 9 under a single title).

I've just submitted my spreadsheet to the accountant- he will tell me very quickly if I've done it wrong. He didn't make any comment when I showed him the spreadsheet. He was very surprsied by the the QS estimate of $2500 for a stove, and was about to strike it out- until I pointed out that it was $2500 for 9 stoves.

I'm not quite sure which of my own reno items will be depreciaited, and which ones I will be able to write off immdiately- that's his job. He says though that painting should be immediately deductible. (In my case, the external painting, which is still proceeding, I was stunned to find out that it had been newly painted just before I bought it- so that definitely counts as a repair. The previous owner had painted on top of old chipped paint with no attempt to repair what was underneath).

 

[Brenda Irwin]

Hi Capitalist, I would do up a separate worksheet and let the accountant do the apportioning if that is what he wants to do.

 

[geoffw]

Hi Capitalist, I would do up a separate worksheet and let the accountant do the apportioning if that is what he wants to do.

I did my bits too late for apportionment. I could do it, but it would be a biggish job. Capitalist is getting him/her self ready early, so it shoulf be easier. If it's done for each apartment, and then summarised as a whole, there should be no problems.

On some items it could be a bit difficult to apportion.

I bought a four litre can of paint, which I have only used for the feature wall of each renovated unit- some of which I renovated last Financial year, and some this FY. Should I claim the whole can against unit #3, or should I apportion the can across the units? What if I leave two litres behind which I don't use? And what about common property stuff?

Actually, my accountant was more concerned about apportioning according to ATO category- so that he could just plug the final figures into my return. He said that he was happy to do that for me- perhaps two hours at $125 ph- but I might prefer to do it myself (less than one hour).

The categories I have from my last return are:

Rent received
RSpecial building write-offPProperty agent fees/commissionsHCouncil ratesKInsuranceL Interest on loansUWater ChargesVBank ChargesFBorrowing expensesIDepreciation (Transferred from schedule)

 

[capitalist]

That also makes sense to me Brenda, as some things i can't really allocate to a unit. I got Deppro to do a schedule when the block was first bought but because it's about 30-40 years old and in original condition, there wasn't a lot to depreciate.
I can't find it now (bad filing skills ), but i can't remember seeing a depreciation schedule for the common areas.

GeoffW, like your units, these are also on one title so i've also got a single set of rates and one building insurance policy. How do these get apportioned? Is the figure divided by 5 and spread around equally?

That's a good point about apportioning stuff like your tin of paint as this is what i'm not sure about.

How would i go about claiming the exterior painting? Divide by 5?

There are 2 seperate decks, one leading to units 2 & 3, and the other deck leading to unit 1 & 3. I'm wondering how this would be depreciated?

The paving will be done around the perimeter of the building and in the backyard of units 1, 2, 3 and 5. Can i depreciate the paving (about $6k) and if i can, how would it be apportioned?

And what about the garden? Is it possible to claim any of this?
Can plants be depreciated or are they written off?
Can i write off the mulch, fertilizer, herbicide etc?

I know i should talk to my accountant about this, but i thought i'd get some ideas here first.

I'm also wondering whether i should get another schedule done after the common area is done or would i be wasting my money? Maybe it's not even considered part of the building/plant?

Or maybe i should just get another shedule done for each unit as it's renovated?

I remember reading a good post (i think by Owen) about getting a depreciation schedule done before an intended reno so that it can then be all written off after the reno, and then get another one done straight after the reno.

Cheers,

Mark

 

[skater]

Hi,
I have a block of 4 units and what I do with them is that I record everthing in MYOB. I have a separate Job Number for each unit and another one for things that cannot be apportioned separately (insurance,etc). This is how my accountant advised me to go about it.

Cheers

 

[geoffw]

That sounds like a good approach Skater.

Capitalist, I'm not sure how those things are handled.

But as far as what you can claim and how, DaleGG's "Tax Battles" manual is one of the best resources I've seen- $99 from www.gratherumgoss.com (or you can buy together with the "Trust Magic" fir a big discount- also highly recommended).

 

[always_learning]

The link above is a little wrong try this one:Gatherum-Goss & Assoc

 

[skater]

I should add that my units are Strata, not on one Title, so maybe my situation is slightly different as I probably need to have costs more accurately apportioned to each unit. Even though they are Strata, I still only pay one Insurance over the entire block AND in the area they are in the Council give you a HUGE discount on rates if you own the whole block, so am only paying one rates also

Cheers

 

[sbe]

Personally, on my tax return, I list mine together as one entry.

ie: 1&2/174 xxxxxxxxxxxx Rd, xxxxxxxxxxxx

Reason - Some bills are just too hard to separate, the loan's across both, and I can't be stuffed figuring it out.

I do track it in MS money as best I can - ie where's it's obvious I attribute to the approp unit, but on the return, I just add them together.

Disclaimer : I'm not an accountant.

Cheerio.

Simon.

 

[capitalist]

Thanks for the replies.

I've got both Dale's books which i should have another look at. In fact Dale's my accountant, so i should probably give him a call and get it from the horse's mouth (so to speak )

That's pretty much what i'm doing now skater, except i use a spreadsheet. I've taken your advice and have started a new worksheet for the common area. I'll give it to Dale and he can apportion it how he thinks best.

That's a good point too sbe, re the loan repayments. The block was bought with 100% finance plus costs, so the repayments are also spread around for all units and i'm not sure how they do accounting for it and apportion seperately.

I'm still wondering if anyone has done any major landscaping and been able to write it off in the one year? I'm not sure you'd be able to depreciate plants and pavers?

 

[geoffw]

I'm still wondering if anyone has done any major landscaping and been able to write it off in the one year? I'm not sure you'd be able to depreciate plants and pavers?

You haven't heard of depreciation of plant?

Dale is O/S ATM, but I'm sure his excellent staff can help you. Just a pity he doesn't have them covering his forum duties

 

[capitalist]

*groan*