Depreciation Schedule Granny Flat

Discussion in 'Accounting & Tax' started by Sheep112, 5th Feb, 2020.

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  1. Sheep112

    Sheep112 Well-Known Member

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    Hello all
    I am in the process of getting a depreciation schedule done one for the main house and one for the granny flat(detached).
    I got a quote for the both in the one report(was advised), which sounded reasonable and good price.
    Is there any issue with this? I imagine I would be getting the one report with separate numbers for the address e.g 27 and 27A.

    A work colleague just ordered one…for the main house, granny flat(detached) and studio(detached) and was told he dad to do 3 separate reports? The fee was a lot more experience. He asked about doing it on the one report for the 3 properties or even 2.
    This is from the same well-known company to us all, so I found it strange….
    Thanks

    Rich.
     
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

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    what if the house is not rented but the granny flat is?
     
  3. Sheep112

    Sheep112 Well-Known Member

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    Hi Terry

    Main house and granny flat is both currently rented.
    Any depreciation experts can advised please...I thought i was getting 2x schedule but on the same report. Now i feel like I am not from the friend's experience?

    Rich.
     
  4. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    I would recommend the 3 reports too. It will cost loads more to break it apart later. While they are a single title each has its own potential use.

    I often recommend a 50% report for each spouse v one joint report. That doesnt cost twice as much - Its not lineal so 3 reports wont cost 3 times one report.
     
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  5. Sheep112

    Sheep112 Well-Known Member

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    Hi Paul

    What is this 50% report you are referring to? So i shouldnt be getting the 2 properties on the one report? Inspection was only done recently so the report hasnt been completed yet.

    What is this break apart did you mean? If i moved into the front house later? what issue would I have?

    Rich.
     
    Last edited: 5th Feb, 2020
  6. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    A jointly owned property may have more deductions when each taxpayer has their own QS report v a single report.

    EACH unit of rentable property should have their own report if there is any possibility that all units are not always rented at the same time AND to the same person AND on the one lease at all times AND forever. Most cant meet that test so a single report is a concern. eg A GF schedule + a house schedule should be two reports.

    Your QS should be able to indicate why. If you dont take their advice then it could mean NO deductions for any Div 40 and Div 43 are available if you cant attribute the amount to each. The excuse it costs more is not acceptable. It will cost you more when the report is incapable of use..
     
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  7. Sheep112

    Sheep112 Well-Known Member

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    Hi Paul

    When I spoke to the company, I wanted 2 schedules and was told this option was better. I was also not advised of any potential issues.
    Any Depreciator or BMT reps can advised?

    Rich.
     
  8. BMT Tax Depreciation

    BMT Tax Depreciation Chris Business Member

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    Without knowing more than what's above, I'm going with what Paul said. 2017's Federal Budget rulings also made it more complicated when the owner has lived in one portion of the property and hence is affected by those rulings.

    You could put things on one report but, the moment the waters are muddied, you and your accountant might curse a lack of foresight if those criteria cause a change in eligibility.

    That said, there are circumstances where it will be completely fine to have it all on one report. It just depends on your history and your plans.
     
  9. Sheep112

    Sheep112 Well-Known Member

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    Hi Chris

    If both properties is tenanted and if I do decided to move into the main house in the future, am I then cannot use the granny flat portion of the schedule? I thought I would be getting two different schedules on the one report.

    Rich.
     
  10. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    Provided the GF is a separate structure the GF elements may remain deductible.

    If any Div 40 (depreciation, not the building allowance) remains on the schedule for the main house assets etc it will terminate that part of the deductibility at any future date. Since the May 2017 changes any assets which are presently eligible for deductible depreciation stop being eligible once you move back in and if you then move back out the Div 40 on the main house assets cannot recommence being claimed...despite what the QS report may show. This is because you have used the assets.
     
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  11. BMT Tax Depreciation

    BMT Tax Depreciation Chris Business Member

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    Confirming what Paul said. Whether that presents an issue or not will depend on a.) whether the dwelling(s) are affected by the 2017 rulings (I don't know whether one or both of them are new or pre-existing, for example), b.) how comfortable you are working with a document that might not represent the current eligibility of the house (while still containing all potentially eligible values) and c.) how the provider in question sets out their report.

    There are still a few details in your scenario that I'm not sure of (e.g., the question of whether either or both dwellings are new), and so there are a few variables at play when giving you answers.

    That might depend on which "well-known company to us all" produces the report.
     
  12. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    Yes they can vary. I will say that with these issues it can get messy and the value of the support our clients get from interacting with knowledable QS staff is valuable. DONT ever buy a cheapo report as many of these get told that an amendment costs $XXXX or offer poor support. Its too easy to dump all the assets into one report and offer a cheap product. A better outcome is a correctly prepared report even if it costs a little extra.

    In the past few weeks I have probably had dealings with complex issues and changes for 8 clients. Just today there were two. A well known QS noted a possible error in their original report and flagged the issue with the client and I. It did not look 100% right and due to discussion the position went from a fright to a benefit. The opportunity to update and correct a report is gold. And the value from speaking to experts is priceless.

    I come back to my golden rule of a QS report. Always get one unless the QS tells you not to bother. And then when they do when you explain the property changes and use etc they will identify how to max things.
     
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  13. Sheep112

    Sheep112 Well-Known Member

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    Hi Paul

    I have been following this forum for awhile so I would know to only use Depreciator or BMT. I have been confirmed the two properties on the one report is ok and amendment can be made at no cost if any issues in the future. So I feel at ease.

    Thank you to that well-known company who addressed the issue and looked after my friend too.

    Rich.
     
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  14. Depreciator

    Depreciator Moderator

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    This scenario comes up often i.e. somebody is renting out a house and there is a detached GF on the block.
    We often suggest to people that it will make their accountant's life easier if there are two Dep Schedules. If everything is on the one Dep Schedule it can be hard to identify which Assets are in which building in the event an Asset is disposed of.
    Last week somebody told us that they were planning to move into the GF themselves in a year's time, so it was definitely important that they had two Dep Schedules.
    Of course, the fee to do two Dep Schedules will be a bit more, but not double. (But if an extra fee at that end saves on an accountant's time, it's sometimes worth it.)
    If people want everything on the one Schedule, that's fine. We keep good records of the information behind a job and can split it down the track if the accountant asks.
     
  15. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    We also recommend Washington Brown and DuoTax based on their service & report standards
     
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  16. Ross Forrester

    Ross Forrester Well-Known Member

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    We use depreciator or Bmt. A seperate report for a separate area of accomodation is preferred.

    When we disclose to the ato inder review I only want to disclose info asked and nothing else. It is not great to show the ato a depreciation report with a whole lot blacked out info because it relates to something else.

    One propert one report. A granny flat is a seperate property.
     
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  17. BMT Tax Depreciation

    BMT Tax Depreciation Chris Business Member

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    I spoke to a gentleman the other day who claimed to have a house and a granny flat. The house was refurbished and split into three self-contained units. The "granny flat" was a mini-duplex. I suggested that he had five dwellings but he was adamant that he only had two. Following his logic, he could have built one block of six units and called that a single dwelling.
     
  18. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    The house may likely be apportioned based on the % of use that relates to private v income which could vary from time to time. eg 3mths at 50% private and 9 mths at 33.33 private. (ie 3/6th and 4/6th)
     
  19. Ross Forrester

    Ross Forrester Well-Known Member

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    Please do not refer him to me.
     
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  20. craigc

    craigc Well-Known Member

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    Good thinking - nice idea Paul.