TAX DEPRECIATION SCHEDULE
Constant changes in market performance and taxation legislation can be difficult to keep on top of – at
a significant cost to investment performance. A tax depreciation schedule and a capital gains tax (CGT)
valuation can assist you to maximise your return on investment. If you’re thinking of buying, selling or renovating a home or investment property, it’s important to seek independent advice to help you make informed decisions. We’ll use our know-how, experience and data to assist you in making evidence-based decisions when tackling your property needs.
Each year thousands of dollars in taxation benefits go unclaimed by individual property investors across Australia. But, calculating your claimable deductions could’t be simpler with the help of Northbourne Valuers professionals.Owners of all types of investment properties, both residential and commercial, are able to claim depreciation deductions, with the ATO stipulating that the property must be income producing in order to make a claim.
Depreciation, which relates to the wear and tear of a property, is split into two distinct categories:
The capital works allowance relates to claims for the wear and tear that occurs to the structure of the property. This includes any structural improvements that may have been made during a renovation. There are some rules relating to the construction commencement date that investors should be aware of when determining what they can claim.
As a general rule, any residential building where construction commenced after September 15, 1987 will entitle their owner to capital works deductions at a rate of 2.5 per cent per year for up to 40 years.
Often, owners of properties where construction commenced prior to the 1987 date think they are not eligible for depreciation, but this is not necessarily the case. Owners of older buildings should still find out what deductions are available, as often these buildings will have undergone some form of renovation which could result in capital works deductions for the owner.
The second depreciable element of a property is the plant and equipment assets contained both inside and outside the property. Investors can claim deductions for the wear and tear on a significant number of easily removable fixtures and fittings found within the property. There are more than 6,000 assets recognised by the ATO, with some common examples including carpets, curtains and blinds, air conditioners, door closers, range hoods and dishwashers.
Unlike capital works deductions, deductions for plant and equipment assets are not dependent on the property’s construction commencement date. The ATO provides an individual effective life and depreciation rate which should be used to determine the deductions which can be claimed, and the assets effective life will reset from the date of settlement.
To make smarter property decisions, speak with us today!
Maximise the taxation benefits of buying, owning and managing your investment property with the help of tax depreciation report.
Let Northbourne Valuer’s knowledge and expertise help you make evidence-based decisions when investing in property.
Q. What is a Desktop Valuation?
A restricted valuation/Desktop Valuation is: “an indication of the value range that the market value of the property is likely to fall within should a Certified Property Valuer be requested to carry out a fully researched valuation assessment of the property in accordance with the Property PRO Residential Valuation and Security Assessment and the definition of market value *
*Source ANZ Valuation and Property Standards. As far as possible, information in this Report is to be provided by the lender/instructed party. For more information about Desktop valuation please refer to Australian Property Institute web site: http://www.api.org.au
A Desktop Assessment is a report prepared:
To Complete Desktop Valuation:
Q. When do you need a stapm duty valuation?
Stamp duty is a tax levied by all state and territory governments in Australia on the purchase of a property.
It paid by purchasers and it usually needs to be paid on or before the settlement date of your property purchase.
You need a Stamp Duty Property Valuation Report to determine the stamp duty payable to the State
Government, when a property is transferred privately between related parties rather than on the open market.
The rate of duty you will pay is linked to the value or purchase price of the property. The revenue office
is each state or territory administers stamp or transfer duty and offers a calculator for assessing what it will
cost on a particular property.
For ACT, please visit ACT Revenue Office website to estimate Duty payment (http://www.revenue.act.gov.au)
For NSW, please visit Office of State Revenue website to estimate Duty payment (http://www.osr.nsw.gov.au)
“Where a purchaser buys a property that already has a building on it, duty is payable on the combined value of the house and land (the house is affixed to the land and forms part of it). Where a purchaser buys land that does not currently have a house on it, but the seller will build a house on the land prior to settlement as part of the contract (Eg a house and land package); duty is also payable on the value of the combined house and land. Where the purchaser buys land in one contract, and in a separate contract arranges for a house to be built on the land, duty is payable on the land contract only” (Source: ACT Revenue Office)
Q. When are you liable for Capital Gains Tax?
A capital gains tax or capital loss is the difference between what it cost you to get an asset and what you received when you disposed of it. You pay tax on your capital gains. It forms part of your income tax and is not considered a separate tax, although it is generally referred to as capital gains tax (CGT).
If you make a capital loss, you cannot claim it against income but you can use it to reduce a capital gain in the same income year. If your capital losses exceed your capital gains or you make a capital loss in an income year you don’t have a capital gain, you can generally carry the loss forward and deduct it against capital gains in future years.
All assets you’ve acquired since tax on capital gains came into effect (on 20 September 1985) are subject to Capital Gains Tax unless specifically excluded.
Selling assets such as real estate or shares is the most common way you make a capital gain or capital loss. Capital Gains Tax also applies to intangible assets such as business goodwill.
Some of your main personal assets are exempt from capital gains tax, including your home, car, and most personal use assets, such as furniture. Capital gains tax also doesn’t apply to depreciating assets used solely for taxable purposes, such as business equipment or fittings in a rental property.
You make a capital gain if the amount you receive from a Capital Gains Tax event exceeds the cost base of that Capital Gains Tax asset disposed, for example if you receive more for the Capital Gains Tax asset than what you paid for it.
The ATO now allow costs incurred in engaging a ‘stylist’ to market a property, together with related furniture hire costs, as part of a property’s cost base.
Initial repairs should be capitalised. Repairs that are more than a replacement or renewal of worn out parts should be added to the cost base and claimed as a deduction when the asset is disposed of. You need to keep records of each element for five years after a Capital Gains Tax event has happened.
If you have or can deduct expenditure, it does not form part of the cost base. That is, costs, which can be deducted, such as interest and rates for an income-producing property, cannot be included in the cost base.
Capital Gains Tax events
Only when a Capital Gains Tax event occurs can a capital gain or loss be realised. Such events include when:
The time an acquisition occurs is important because if it is determined that an asset was acquired before 19 September 1985, no CGT will arise. When a disposal occurs, the capital gain is determined at the date the contract is entered into, rather than upon completion.
FAMILY LAW VALUATION
Family law valuation is a complicated area of practice. We understand that divorce is never easy. There are countless issues that have to be settled, including what’s going to happen to the shared residence. There are generally two alternatives when it comes to real estate – it can be put up for sale and the proceeds divvied up, or one party can “buy out” the other. In either case, one or both parties would find it in their best interest to get a valuation of the joint real estate.
When the purpose of a valuation is the division of assets, it needs a well-supported, authoritative value conclusion that can be supported by a judge. When you order a valuation from Northbourne Valuers, you can be assured to receive the best service with courtesy and top notch analysis.
ACT attorneys take into account valuation of your property when determining its worth for assets disputes. We have a great deal of expertise working with everyone involved and are standing by to assist your needs. We assemble appraisal documents that meet the requirements of the courts and various agencies.
For lawyers representing a client in a divorce, your case’s evidence regularly needs a Family law valuation to determine market value for the residential real estate involved. We are familiar with the techniques and what is imperative to complete a retrospective valuation with an effective date and Market Value opinion that matches the date of divorce. Each family law valuation handled with high degree of professionalism and expertise. Under the ethics provision within the Standards of Professional Appraisal Practice (API) each valuation is handled confidentialilly ensuring the utmost discretion.
Whether you are an individual person seeking assistance or Family Lawyer, you can be assured that engaging our services equates to high quality and good value. We are Certified Practicing Valuers (CPV) and Associate Members of the Australian Property Institute (API) and Australian Valuers Institute (AVI)
Our Templates meet the guidelines as set out in the Australian Institute Code of Professional Practice Standards 2009 and According to Federal Court of Australia Practice Note CM7. Our fee structure is affordable and offers great value for our clients.