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Depreciation: an investor profile, BMT Tax Depreciation
Could your clients soon be smiling too?
Article Provided by BMT Tax Depreciation
Property Managers often ask the question, how much better off will my client be once they factor in property depreciation?
According to Bradley Beer at BMT Tax Depreciation, the average property investor can claim between $5,000 and $10,000 in property depreciation deductions in their first year’s claim.
Just imagine telling this to one of your investor clients who is currently unaware of property depreciation, then picture their reaction to the knowledge that they could soon be $3,536 better off just by claiming the depreciation deductions available when they complete their next annual tax assessment. We’re sure sharing this knowledge with them will make you and your client smile.
That’s exactly what happened when Amy’s Property Manager recommended she contact BMT Tax Depreciation to find out what depreciation deductions were available for her investment property.
Amy purchased a nine year old three bedroom house in an outer suburb of Sydney for $610,000 just over one year ago. Towards the end her first year of owning the property, Amy mentioned to her Property Manager that she was concerned about her cash flow from the property. That’s when her Property Manager suggested she speak with a Quantity Surveyor and recommended she contact BMT Tax Depreciation to find out what depreciation deductions she could claim for the building structure and the plant and equipment assets contained within the property.
Prior to making her depreciation claim, Amy’s investment property was earning a rental income of $495 per week with a total income of $25,740 per annum. Expenses for her property, including interest rates and management fees, totalled to $41,028. This meant Amy was experiencing an annual after tax outlay of $9,631 or a loss of $185 per week from her property.
Amy contacted BMT Tax Depreciation who completed a thorough site inspection and provided a detailed tax depreciation schedule showing the deductions available for her property for the next 40 years. She found that in the first year she would be entitled to $9,585 in depreciation deductions. The following table provides a summary of Amy’s scenario before and after depreciation was claimed.
By claiming depreciation, Amy’s annual outlay from the property was reduced to $6,085 per annum or $117 per week. That is a difference of $68 per week or $3,536 per year.
“By claiming depreciation, I was able to significantly reduce the amount of tax paid on my investment property. I can’t thank my Property Manager enough for recommending BMT to me,” Amy said.
“The level of customer service BMT gave me and their attention to detail was also great. My Accountant even commented on how easy to understand the BMT Tax Depreciation Schedule was. The extra cash in my pocket will go a long way to help me afford my repayments, management fees, repairs and maintenance costs,” she said.
Recommend an expert
By ensuring your clients maximise their depreciation claim you can make a significant difference to their cash flow. It is important to recommend a Quantity Surveyor who specialises in tax depreciation. A specialist Quantity Surveyor such as BMT Tax Depreciation will ensure they identify plant and equipment which may otherwise be missed or claimed incorrectly. This will increase the rate at which items within the property can be depreciated.
If you have a client that will smile when they hear about depreciation entitlements and think they would benefit from claiming depreciation, please do not hesitate to contact one of their friendly staff on 1300 728 726 or visit www.bmtqs.com.au.
Bradley Beer (B. Con. Mgt, AAIQS, MRICS) is the Managing Director of BMT Tax Depreciation. Please contact 1300 728 726 or visit www.bmtqs.com.au for an Australia wide service.
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