Blog / Property Management
Resolve disputes with RESI Rates, BMT TAX Depreciation
We’ve all heard the horror stories about tenants who damage parts of the building structure or assets contained in an investment property and the disputes that arise over who will pay for this damage.
Whether deliberate or not, disputes over damaged assets often escalate, leaving the Property Manager in the middle trying to bring the situation to a peaceful resolution. Property Managers dealing with disputes in their day to day work will now have a tool to assist them. BMT Tax Depreciation’s handy new App called Resi Rates will help in these situations. “The App was designed to assist Property Managers to search and find out the depreciation rate and effective life of any depreciating asset normally found in a residential investment property,” says Bradley Beer, the Managing Director of BMT Tax Depreciation. “We also believe Property Managers will use the information to help them to resolve disputes over damaged assets and with maintenance and replacement scheduling,” Bradley said. The below example demonstrates how Resi Rates helped one Property Manager to resolve a dispute between a property owner and a tenant.
Terry purchased an investment property two years ago. At the time of purchase, Terry installed brand new carpet at a cost of $3,155. After two years, Terry’s tenants decided to end their lease. On the exit inspection, the Property Manager discovered substantial damage to the carpets in the property. As the carpet needed replacing, a dispute arose over whether the costs for the damage should be covered in part by the tenants.
The Property Manager conducted a search on BMT Resi Rates to find out the effective life and depreciation rate for carpet. From the search, they discovered that carpet in a residential property has an effective life of ten years, which works out to a rate of ten per cent per year using the prime cost method of depreciation. The Property Manager was able to calculate that based on the effective life of carpet as set by the Australian Taxation Office (ATO) there was still $2,555 of value left in the existing carpet.
Below is the formula the Property Manager used to calculate the remaining value of the carpet the property owner would lose due to the exacerbated damage done by the tenants.
This information shows that the tenant had destroyed a valuable asset. The Property Manager was then able to use this information to form a case for the tenants to be responsible for paying the remaining $2,555 as damages to the property owner.
For more information about Resi Rates or property depreciation, contact BMT Tax Depreciation on 1300 728 726. Property Managers can download BMT Resi Rates App by visiting http://www.bmtqs.com.au/resi-rates-app-support. 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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