BMT compared to other tax depreciation companies

Hi Sean,
I’m not saying there is any difference in quality between a full price BMT report and a half-price BMT Report.
They are all the same.

The ‘you get what you pay for’ is never more pertinent than when you compare a QS prepared tax depreciation report (which includes a QS physically inspecting the property) and a ‘self assessed’ report.

‘Self assessed’ reports tend to cost about $250-$350.

As an aside, it’s interesting that BMT have capped their price at $770 for about 10-years now.
Must have hit a price ceiling.

 

There is competition in the market which caps price. That said, many QS firms are engaged for construction estimates and generate substantial fee income from "non-retail" product and services. There are many smaller QS firms that compete on price who range from reasonable to very poor in terms of product. I just saw reports from one that I would describe as the most ****** QS reports I have ever seen. I wouldnt have paid a cent for them. I cant even understand what is deductible and had to ask another QS for their thoughts. They laughed. I called the QS and they didnt speak english well and it was a waste of time. The other QS agreed it was a **** report (all three of them). I wish I could publish it but it is copyright and my post would be totally disparaging about the QS reputation. Its nobody ever mentioned in PC posts fortunately. I suspect the client went looking for a bargain.

My opinion is dont engage a cheap QS provider. ALL the problems I see are evident in cheap reports

• They are often confusing or contain errors
• Often are desktop estimates not detailed
• Often expire at 5 years or some at 10. Then ??
• Dont often address changes in recent years
• Some dont even use pooling
• Some offer PC or DMV and not both ??
• Many refer to "year one", etc...No "dates". Does your head in.
• Dont ask the client important facts like the start date for deductions etc
• Dont consider split reports fro 50/50 ownership which can axmise deductions

 

This is exactly what I do too.

It takes a little longer to prepare the report - but saves the accountant (using it) a lot of time.

 

Have been in the unique position, where a friend received 3 tax depreciation reports for the one property.
He bought in a new development, where the developer provided a depreciation report from the QS company that did the construction costs for the developer.
But he also received a BMT depreciation report from the mortgage broker.

Both reports were very similar on the amount of plant they were able to assess, but the big difference was the construction cost estimated by each.
The developers QS (who has the construction costs) estimated the construction cost for his unit $50K lower than the BMT report. So the returns in this report were significantly lower because of this, a $7000 difference (in deductions) over 5 years (mainly due to the higher construction cost).

The third report was done by a local QS company, who were able to identify more plant within the property and they were able to achieve a higher result than the BMT report. They used a qualified QS to inspect the property, which in turn created better deductions for the property.

The first two reports were provided free to the him, as the developer and mortgage broker paid the other QS companies to prepare the reports.
The third report was paid for by him, but he was more than happy to pay and extra fee, as this report gave him more money back overall.

It's interesting, that if he had of only received the first report and not had the knowledge to get the third QS's report, he would have been thousands of dollars worse off!

Unfortunately people look for the cheapest price for a depreciation report thinking that they are all prepared the same way!

 

Thanks Sean,

That's some great info yuo've shared with us.

...and very typical of how it all plays out in real life.

 

Ive found the main difference to be lead time.

Call Depreciator and they come out the next day. Call BMT and they come out in a months time.

 

I’m happy to wait.. as long as the values are accurate. Fastest doesn’t always mean best.

 

I don't think there's much difference in accuracy in those 2, both well regarded companies.

 

Hi Tyron

Would love to get your thoughts on another aspect of what you have talked about in this post.
With Washington Brown being a proper QS firm, meaning you actually use quantity surveyors to prepare your reports.
Your firm iften is given the construction costs for a property by the developer or builder.
Then BMT come in on the same property and estimate a construction cost higher than the one you were given, potentially giving higher returns for the investor.
Technically they are wrong, but the clients is happy as they receive potentially higher deductions, who governs them with the constructions costs?
I posted recently an example where they were $50k higher than the QS firm that had the constructions costs.

 

Quantity Surveyors reports are not a absolute proof positive assessment of actual costs or even possible costs. It is a opinion and each will vary based on knowledge or a lack of it. eg Difficulties in excavation for foundations or structural works and site specfic issues may influence costs and a post-construction review of a property certainly wouldnt pick that up. Redesign or rework for site issues is common and cost will rapidly depart from expected cost. ACTUAL construction costs are not necessarily used even when provided. Importantly any site issues that depart from the norm should always be bought to the QS attention. For example Peter the developer also owns Concrete Pty Ltd that supplies the concrete at cost and the family who are experienced concrete workers provide free labour for the pour. I have regularly seen report variances. They are generally fairly minor when conducted by major firms.

In 25+ years I certainly say I do not know of a preferred QS that provides consistenly higher depreciation than its peers. If I did I would have serious concerns. In general this chase for the mythical unicorn QS report is like buying three cars at three car dealers then saying one was cheaper and one was more expensive. In reality there is a cost to learn this.

I have seen examples of gross error in QS reports however. Not from BMT or WB. Generally smaller operations.

 

Hi Peter
Its interesting to see the point of view of an accountant in regard to construction costs. Tax depreciation accounts for a very small percentage of a quantity surveyors skill set. With measuring and quantifying constructions costs being their core skills.
Lets look at it a different way, if BMT had of done a costplan at the start of the project for that developer and told them that each unit would cost $50k more than the actual costs, that development would not have gone ahead.
Or they would have been sacked as the QS.
Proper QS companies who do costplans, can go out of business when they get this stuff wrong!
What i hear you saying, is that it doesn't matter what something actually cost, and that if another QS's opinion of costs is higher than the actual, lets go with that?
You mention that quantity surveyor reports aren't proof of actual costs, but qs banking reports are exactly that. They take into account latent conditions, which are added to the construction costs as variations, to give you a final number at practical completion.
And in my comparison, this is what the developers QS had access to.

 

If I was a OTP buyer I would be very concerned for the cost pressure the developer and contractors are under to deliver for the agreed price. The QS costplan may be completely outdated given the timing between lender approval and build. Unsold units may be a blessing in some builds as a way the developor can avoid the concern.

 

I'm not talking about a QS costplan.
I am talking about the QS Banking report, which is done a month to month basis and works out monthly payment figures for the builder.
This report has the original contract price of the build and all the variations to the contract, that may have been caused by some of the factors you previously mentioned.
QS's preparing depreciation reports are obliged to use these construction costs when they are available, which in this case they are for the developers QS.
So in the example, one QS company uses the real world construction costs and one uses their own opinion of construction costs.
Getting back to the original question to Washington Brown, they often get these construction costs given to them, but have to compete with the likes of BMT who use their opinion of the construction costs and generally will come out higher.
Seems like an accountant's point of view, is you don't care as long as a QS signs it off and it benefits your client?

 

Sean - You keep telling me what my professional opinion and resulting actions are as a tax agent. I have never said that. You are incorrect.

Seems you have a beef with BMT. I could share other cases which are competely contrary to this view but must not as it would breach client confidentiality. I have never seen a client case where they had actual costs who sought an assessed costs report to obtain better outcomes. I have seen several cases where the taxpayer has given actual costs to a QS which didnt get translated properly to a report which was redone by BMT and it was higher based on actual costs. I wont name those QS as I lack the experience and knowledge to assess why their report was low when both firms had the same data and the original one didnt use costs they were given. Even BMT have been unable to explain why. Mistake is my only presumption.

 

Hi Peter

I have no beef with BMT, they just happen to be the QS in this comparison and sorry if my comments appear to be telling you, what your professional opinion is, they are more a question. As my original question was about opinions with given costs vs estimated costs. There are no right or wrong answers, just after thoughts on the whole situation. As this is usually the difference between QS company reports.
Anyway hopefully one day Tyron might chime in on the question that I had asked of him and see his thoughts.

 

Shawn - who is Peter ?

As a member of AIQS I'm sure Ty may avoid disparaging other firms. Its not his style.

 

Sorry Paul, was writing to a Peter in an email and had his name on the mind, both start with P and carried forward the mistake.
Thought Tyron might weigh in, as he had a fair go at Chris from BMT on another topic!

 

BMT has been very slow and nit following instructions.

Any other company someone have used?

 

Hello, Never giveup.

In an attempt to get you not to give up on us, I can have a look into this for you and see if there's anything that can be done.

Yes, we have increased turnaround times currently, and that is something we have been grappling with since the lockdowns commenced, and beyond. For example, we have had to postpone inspections due to COVID cases both among our staff and also in properties we've been visiting, and we're feeling those ripple effects even now. It has also affected our report production beyond the completion of inspections.

What we're not going to do is put people at risk, nor are we going to cut corners by foregoing inspections when they should happen as best practice and for the best outcome for you, but we also don't like that your turnaround time has been extended because of that.

Again, if I can help, please message me your details privately.

 

Name a product in oversupply and its price has fallen. Ok Masks and RAT tests. Cant think of others.

I get a lot of tax enquiries from people saying their tax is slow., can I help them faster ? I cant change that either. So many industries are delayed and busy. Construction is nuts. I imagine in the QS game it must be a issue to consider what costs were back in the "good old days" a year ago...or the real cheap time 3 years back. And anyone costing a future project I wonder what price increase should be a factor ? 10% ?