Blog / Vendor Management
Take a chip off the block, Bradley Beer
Bradley Beer, (B. Con. Mgt, AAIQS, MRICS), Managing Director of BMT Tax Depreciation
Educate investors about property depreciation.
Those avid Block fans amongst you would have recently seen me appearing on an episode of the show to discuss the potential depreciation investor buyers could claim if they were to purchase contestants Darren & Dee’s apartment.
In fact, BMT Tax Depreciation completed depreciation estimates for all five of the Glasshouse apartments at 121 High Street, Prahran. Below is a summary of the estimated minimum and maximum first year depreciation deductions and the minimum and maximum total depreciation deductions for each apartment on The Block Glasshouse:
As the table shows, BMT Tax Depreciation found an investor purchaser could claim a minimum of $49,714 and a maximum of $62,545 as an average first year depreciation deduction if they were to buy one of the five properties. The total minimum and maximum depreciation deductions over the life of the property (forty years) found were over a million.
For property professionals, hearing about tax depreciation estimates like these being used during the sale of a property is sure to get you excited. Everyday my staff hear how presenting depreciation estimates for a property really made a difference when convincing property investors to make a purchase or to help them to grow their rent roll.
Just as Darren and Dee expressed on the show, many Australians are unaware that they can claim deductions due to the wear and tear of the structure of the building and the plant and equipment items within the property.
Property investors appreciate any additional information they receive from a property professional when making their decisions. Presenting investors with information on the deductible costs involved in owning the property including depreciation adds value to a property professional’s existing service. This information also allows investors to work out the actual costs of holding the property after tax.
It is important to make property investors aware of the additional deductions they can claim when renovating an investment property. If not done correctly, an investor will potentially miss out on the additional deductions that become available by not claiming the remaining depreciation available for the items being removed from the property in the year they are removed.
If an investor client is planning on undertaking any work to their property, whether it is an update to the bathroom or a major renovation project like The Block, it’s best to recommend they speak with a specialist Quantity Surveyor before they start any work.
A tax depreciation schedule should be completed prior to and after a renovation occurs to allow a depreciation specialist to complete a full site inspection of the property and take photographs and notes on the items contained in the property before their removal. This will support the investor’s depreciation claim for any items that have since been removed.
An updated tax depreciation schedule completed after the renovation will list any newly installed structures and assets and outline the depreciation deductions the owner can claim for the remaining life of the property.
A depreciation expert with over 16 years experience in property depreciation and the construction industry, Bradley is a regular keynote speaker and presenter covering depreciation services on television, radio, at conferences and exhibitions Australia-wide. Please contact 1300 728 726 or visit www.bmtqs.com.au
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