Join Australia's most dynamic and respected property investment community

Should I order depreciation report now?

Discussion in 'Property Finance' started by andy ngo, 24th Feb, 2016.

  1. andy ngo

    andy ngo Active Member

    Joined:
    19th Jan, 2016
    Posts:
    25
    Location:
    sydney
    Hi All

    I just bought a property in Western Sydney. The house was built before 1987

    - The property will be investment property from now to 12/2016

    - In 2017 I intend to move in and it will become my principal place of resident

    should I order depreciation report now and wait until I move in 2017?

    How much does it cost for a depreciation report in Western Sydney area?

    thank you very much!
    regards
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    9,037
    Location:
    Sydney
    You wont be able to claim depreciation once you have.moved in so now would be better. Costs about $900
     
  3. JameZ

    JameZ Active Member

    Joined:
    18th Jun, 2015
    Posts:
    29
    Location:
    Sydney
    Shop around there are a few reputable ones that can do it for cheaper.

    For existing houses over 30 years old a lot of depreciation companies recommend you send in photos to them and do a "Desktop" depreciation for half the price. From my/clients' experience we find a full onsite inspection/depreciation usually nets better results.

    Too many depreciable items will be missed if you simply send them photos.
     
    andy ngo likes this.
  4. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    9,037
    Location:
    Sydney
    Also consider the costs v benefits if you will only be claiming it for 1 year
     
    MJS1034, andy ngo and York like this.
  5. Daniel Taborsky

    Daniel Taborsky Well-Known Member Premium Member

    Joined:
    10th Nov, 2015
    Posts:
    147
    Location:
    Perth, WA
    Some offer a guarantee of finding a certain amount of deductions (e.g. they will find double their fee in deductions in the first year or the report is free). If you are on a high tax rate this might make it worthwhile (remember the fee to obtain the report is also tax deductible). Best to give some of them a call, they should be able to give you an indication of whether they think it would be worthwhile or not. If the property has been recently renovated then there is a good chance it will.
     
    andy ngo likes this.
  6. BMT Tax Depreciation

    BMT Tax Depreciation Chris Business Member

    Joined:
    22nd Jun, 2015
    Posts:
    102
    Location:
    Australia
    We generally find that even claiming for just one year on any property will net a positive result. It might not be a massive return in some cases but you'll have more money than when you started. The easiest way to make an assessment is to get a provider to give a tailored estimate for your property. If you private message me a link to the listing along with anything you've added since purchase I should be able to give you an idea. Then it would be a matter of running the estimate by your tax agent to see what they think.

    The timing is much of a muchness because the report will show all available deductions regardless. It won't be claimable for the period after moving in, but it will still be available for the time prior to that. However, doing it before the 2016 tax return is completed will be the most painless option.

    A $900 report is the exception rather than the rule.

    Bingo. A self-assessment is a sure way to shoot yourself in the foot. I've seen those checklists and they're extremely basic. Items will be missed and the ones that aren't missed will likely be undervalued.

    99% of the time even an unrenovated property will give a positive result on first use of the report. We'll generally find a couple of thousand dollars in deductions in the first year on even the shabbiest of places. Combined with the deductible fee, for most taxpayers this is an instant positive result.

    Our guarantee is that we'll double the fee in deductions in the first full financial year and the maths is simple. Fee (x) + double the fee (2x) claimed = 3x. Most taxpayers will get a third of their deductions back as a saving/refund: 3x/3 = x. You're at worst breaking even in that scenario and it's extremely rare that we merely double the fee.

    Do seek advice from your tax agent in conjunction with an estimate, though.
     
    Terry_w, MJS1034, JameZ and 1 other person like this.
  7. JameZ

    JameZ Active Member

    Joined:
    18th Jun, 2015
    Posts:
    29
    Location:
    Sydney
    I was pleasantly surprised with 6k+ deductions in the first year for a 30+ year old house in Logan with no recent renovations that I was aware of.
     
    andy ngo likes this.
  8. joel

    joel Well-Known Member

    Joined:
    23rd Jun, 2015
    Posts:
    784
    Location:
    Adelaide
    I bought a house built in 1966 worth 150k and did 3k worth of renovations. I managed to get 4k of deductions in Year 1 from a $500 depreciation report. So yes, get it done now.
     
    andy ngo and Terry_w like this.
  9. Azazel

    Azazel Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    8,113
    Location:
    Brisbane
    Get one done, for sure.
    It's surprising how much it can be on an older house.
     
    andy ngo and Leo2413 like this.