Scrapping - Tax deductions

Have I now missed the boat, is there anyway around this??

I was renting a property for 12 months, I then demolished the house no depreciation schedule on this property as I was planning to build/sell all of the 3 villas.

Current scenario has changed, I would like to sell 2 villas and hold 1.

The issue is that you didn't have a depreciation schedule in the first place. Scrapping is the second part of a two-step process: to get the scrapping deduction you need to have a value to scrap. We cannot value the assets in the original house now that it is rubble, I'm afraid.
 
The issue is that you didn't have a depreciation schedule in the first place. Scrapping is the second part of a two-step process: to get the scrapping deduction you need to have a value to scrap. We cannot value the assets in the original house now that it is rubble, I'm afraid.

I get it, was confused.

OK, can I get an estimate per valuation of the property, for example sqm of home, using a ration of sqm rooms, carpets, rooms- blinds, dishwasher new, cooker gas... this basic type of template ?? and work from this.

I bet some investors do this themselves

MTR:)
 
I get it, was confused.

OK, can I get an estimate per valuation of the property, for example sqm of home, using a ration of sqm rooms, carpets, rooms- blinds, dishwasher new, cooker gas... this basic type of template ?? and work from this.

I bet some investors do this themselves

MTR:)

I bet some do. Somersoft member fullylucky comes to mind as someone who might try. Just to get this straight: are you asking if you can fudge the figures and/or if I can help you do so?

The most I could say is that if you have photos of the plant and equipment items installed in the property pre-demolition then your accountant might be able to help you with this.
 
I bet some do. Somersoft member fullylucky comes to mind as someone who might try. Just to get this straight: are you asking if you can fudge the figures and/or if I can help you do so?

The most I could say is that if you have photos of the plant and equipment items installed in the property pre-demolition then your accountant might be able to help you with this.

Thanks BMT
Yes, I do have photos and meeting accountant in Feb, so thanks for this, whether I do will be dependent on his advice.

Appreciate help:)
 
Yes, I have a g/friend who will be saving $26K using scrapping, so just tacking this onto her 3 villa project and also using depreciation schedule for these. I am new to scrapping but am glad I got some great advice from experts here on SS:)
 
Glad to help. We would only have been able to do the depreciation schedule for you with a visit to the property pre-demolition and wouldn't be comfortable doing it without an inspection.

While accountants can't assess capital works, they can put values to fixtures and fittings, so if you have photography and possibly a floor plan (to work out how much carpet was there, etc.) at least there's a chance to assign safe values to fixtures, which will get you something (as opposed to nothing).
 
Glad to help. We would only have been able to do the depreciation schedule for you with a visit to the property pre-demolition and wouldn't be comfortable doing it without an inspection.

While accountants can't assess capital works, they can put values to fixtures and fittings, so if you have photography and possibly a floor plan (to work out how much carpet was there, etc.) at least there's a chance to assign safe values to fixtures, which will get you something (as opposed to nothing).

Thanks for help:)
 
Thanks BMT
Yes, I do have photos and meeting accountant in Feb, so thanks for this, whether I do will be dependent on his advice.

Appreciate help:)

Accountants can't estimate and can only recognise assets at cost in the year when the outgoing occurs. Missed the boat.
 
Glad to help. We would only have been able to do the depreciation schedule for you with a visit to the property pre-demolition and wouldn't be comfortable doing it without an inspection.

While accountants can't assess capital works, they can put values to fixtures and fittings, so if you have photography and possibly a floor plan (to work out how much carpet was there, etc.) at least there's a chance to assign safe values to fixtures, which will get you something (as opposed to nothing).

how? Accountants can usually deal with cost of items. It's why we can't do estimates etc We can't assess values or estimate anything. but can advise on effective lives of actual costs. self assessed life of an asset is often ignored
 
how? Accountants can usually deal with cost of items. It's why we can't do estimates etc We can't assess values or estimate anything. but can advise on effective lives of actual costs. self assessed life of an asset is often ignored

Thanks for clarifying, Paul. I'm happy to defer to you on this one. I was only going on the fact that TR 97/25 only applies to Division 43. For several obvious reasons we discourage people from doing this (and now it seems we have another reason) and I was merely bringing it up as a last resort to try.
 
I have posted a new thread on scrapping and claiming scrapping if intention is to sell. I also keep being told by some that their accountant doesn't believe in scrapping deductions.
 
I have posted a new thread on scrapping and claiming scrapping if intention is to sell. I also keep being told by some that their accountant doesn't believe in scrapping deductions.

I have heard this too, not my accountant but a friend's acct.

So it looks like I have missed the boat, lesson learnt.

Hard sometimes, as I was planning to sell all of these, but then realised I would pay too much in tax, one step forward two steps backwards.

Learning so much, good to have you guys on board.

Big thankyou:)
 
I have heard this too, not my accountant but a friend's acct.

So it looks like I have missed the boat, lesson learnt.

Hard sometimes, as I was planning to sell all of these, but then realised I would pay too much in tax, one step forward two steps backwards.

Learning so much, good to have you guys on board.

Big thankyou:)

Slightly off topic but how are you managing the GST you have claimed via your BAS for the ones which were going to be sold but now not? My accountant would beat me with a stick :)

I think the answer to future projects is to spend the money on getting a depreciation report so that it's there if you need it later on. Gives you the options to be fluid and follow the market if needed.
 
Slightly off topic but how are you managing the GST you have claimed via your BAS for the ones which were going to be sold but now not? My accountant would beat me with a stick :)

This is a very common mistake. One that results in penalties when the ATO routinely detect it.

My view is you only claim the GST when there is a OTP contract or a committed sales contract available. The accounting records need to be very good to assist with apportioning etc and to identify the precise GST involved.

More often than not clients claim the GST when they sell under the margin scheme and the two often are comparable numbers so there is no major drama. What worries me is those that claim the GST up front often whinge about GST and overpay it by paying 1/11th of the sales price to the ATO. Typically under margin scheme it can be half that.

A further mistake made is that they rent it our for a short time and try and avoid the QS report. The QS deductions may be $380+ a week...Doesn't take long to recoup the outlay and a short duration can be well worth the cost. That QS report can use GST inclusive costs :) This can bump up deductions by 10% too.

A good QS will provide the builder with one version and redo it so its based on post-GST costs for when its sold for the investor. Adds value to the sale too.
 
I get it, was confused.

OK, can I get an estimate per valuation of the property, for example sqm of home, using a ration of sqm rooms, carpets, rooms- blinds, dishwasher new, cooker gas... this basic type of template ?? and work from this.

I bet some investors do this themselves

MTR:)

Yes, check with Fullylucky
 
This is a very common mistake. One that results in penalties when the ATO routinely detect it.

My view is you only claim the GST when there is a OTP contract or a committed sales contract available. The accounting records need to be very good to assist with apportioning etc and to identify the precise GST involved.

More often than not clients claim the GST when they sell under the margin scheme and the two often are comparable numbers so there is no major drama. What worries me is those that claim the GST up front often whinge about GST and overpay it by paying 1/11th of the sales price to the ATO. Typically under margin scheme it can be half that.

A further mistake made is that they rent it our for a short time and try and avoid the QS report. The QS deductions may be $380+ a week...Doesn't take long to recoup the outlay and a short duration can be well worth the cost. That QS report can use GST inclusive costs :) This can bump up deductions by 10% too.

A good QS will provide the builder with one version and redo it so its based on post-GST costs for when its sold for the investor. Adds value to the sale too.

Thanks Paul. Good advice as usual. I claim mine as you explain but I had heard many people claiming it quarterly during the build process.
 
I get it, was confused.

OK, can I get an estimate per valuation of the property, for example sqm of home, using a ration of sqm rooms, carpets, rooms- blinds, dishwasher new, cooker gas... this basic type of template ?? and work from this.

I bet some investors do this themselves

MTR:)

Stupid ones may try. Taxpayers can always enter any number they like as a tax deduction. Tax is a self assessment system. The problem is you fail the substantiation requirements. Just shut your eyes...make up a number and claim it ?? The ATO would then review 100% of the balance and start disallowing from that point. Then add penalties, interest etc.
 
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