My Principal Property is Now a Rental Property

…just turned your principal property into an investment property… or about to?

Here’s a few examples of what some clients have acheived when getting a tax depreciation report for their [former] principal place of residence in Brisbane…

What’s actually claimable under tax depreciation legislation?

Before doing anything it’s good to know what counts as a “depreciating asset.” The ATO defines it as “an asset that has a limited effective life and can reasonably be expected to decline in value over time used.”

A mouthful yes. But roughly translates to “everything”—with the exclusion of plants, turf and earth.

Here’s a list of what you can claim.:

Fencing
Retaining walls
Driveways
Paving
Garden edging
General hardlandscaping
Letterbox
Clothes line
TV antenna
Skylight
Inground swimming pool
Garden shed
Pool House
Carport
Patio
Verandah
Roof replacement
Painting
Electrical upgrades
Plumbing upgrades
Bathroom renovations
Laundry renovations
Kitchen renovations
The House structure

Everything listed above falls within Divsion 43 of the ATO Tax Rulings and needs to be newer than September 1987. Some even need to be newer than February 1992

But you don’t need to know what goes where. That’s the role of a tax depreciation Quantity Surveyor – so I’ll do that for you.

What Can’t Be Claimed

Some items fall into Division 40 and can only be claimed as tax deductions if they’re brand new.
Technically known as “plant and equipment” items like;

Carpet – appliances – light shades – air conditioning – blinds – pumps – Hot Water Systems and so on, aren’t included in the calculations (unless brand new).

While you won’t be able to claim the upfront losses on these second-hand items, you will be able to mark them down as a Capital Loss when you sell the property.
(Reducing your Capital Gains Tax)

In my reports you’ll find these items categorised as “capital losses” and included in a Capital Loss Schedule within your report. When you do sell (or move back in) your Accountant will use this schedule to leverage as much CGT reductions as possible.

Is tax depreciation worth it?

In a nutshell, yes. But results vary and come down to four main factors:

You will almost certainly save money with a tax depreciation report. But the make-or-break will be decided by this:

Some inspectors are good. Some are not.
But like Einstein said:

And in the words of one of my own clients…

*****
“Hi, my name is Viendra Raj and thanks to my accountant I have 5 investment properties dotted around Brisbane.
But I fired him after he mad a fundamental mistake that cost me thousands.
He used the wrong depreciaiton surveyor to do my depreciation property reports.
The depreciation on my first home (a 1981 built house in Morayfield that was owner occupied originally) was jsut $384 per year in deductions.
And my late 80’s Samsonvale house got only $1,622 per year.
…My accountant said that was a good result
I thought so too until I needed to update one, and the original surveyor who did the report wasn’t around. I had to find a differnect surveyor in January and I chose Mr William Callaghan form WRCQS.

Here’s what happened next…

My Morayfield deductions had a huge increase from $384/yr to $4,227 per year.
an 11-fold increase in tax savings!

So I paid to get my Samsonvale one re-done too and it went from $1,622 to $6,505 per year. A 4-fold increase!

I was gutted that I’d missed out on thousands in deductions – now too old to backdate and claim for.
But i was also happy to finally claim every deduction I’m still enetitled to moving forward.

When I asked Mr William how he did it (I didn’t want to get in trouble from the tax office) – his answer was simple

“I just walked around your property. Noted all the renovations and claimable items. Put an accurate value on them, then worked out the new totals”

Now my tax savings are tens of thousands more because of Mr William’s efforts and I urge you to do the same.
I hope this helps Mr William and his customers”
*****
Vijendra wrote that testimony for me because he was so happy with the results.

Note: former PPR properties will also need a market valuation (aka: Capital Gains Tax Valuation) in order for the ATO to calculate any future Capital Gains Tax (CGT)
…If you don’t get this report the ATO may over-tax you when a CGT event occurs

I can do this for you too and can provide a quote for it.

I’ve lost count of the number of CGT reports I’ve produced but they’re always prepared in a favourable tax advantageous way (for you).

Still have questions about claiming deductions from your former Principal Property?

…maybe these FAQs will help you

QUESTION: What happens if i don’t get a report?

…well nothing…

Just like nothing would happen if your friend gave you a fist-full of freshly printed lotto tickets and you never checked for winners

But the great enemy of us all is taxation

And with rental properties – doing nothing means you end up forking out more tax

More of your fair share of hard-earned-cash ends up in government coffers.

…and i doubt they could do as good a job as you at managing your money.

So why let them?

QUESTION: Are tax depreciation repoerts for older houses worthwhile?

Usually, yes.

Mandatory safety upgrades = tax deductions
Energy efficiency upgrades = tax deductions
Repairs & maintenance = tax deductions
Renovations = tax deductions

This doesn’t mean every old house will benefit from a report.

But most will

QUESTION: how do I know if my house is worthwhile doing a report?

Simple rule of thumb: Once you’ve got $40,000+ in claimable works – including renovations, improvements and makeovers – a Tax Depreciation Report will save you tax.

That’s because $40,000 in renovations is claimable at 2.5% pa.

…so that means you’ll get $1,000/yr in tax deductions

What’s ‘Claimable Works’:this is any structrual work like – patios, kitchens, fencing – and/or permament makeovers like – painitng, tiling and window tinting – carried out after September 1987

QUESTION: When should I get a Tax Depreciation Report?

The best time is that vacant period between you moving out and the tenants moving in.

…but in saying that, I almost always inspect PPoR rentals in the last week or so before the owners move out. It jsut seems to happen that way.

QUESTION: Do you have to inspect the property?

Yes.

I’ve found principal properties have bucket-loads of claimable works done to them. Most of which can’t be seen in online photos.

And if I can’t see them – I can’t include them.

…So that means you miss out on all those tax deductions.

That’s why I insist on inspecting all properties older than 4-years of age.

QUESTION: What does my Accountant do with my report?

Your Accountant will mark-off the depreciation values tht I’ve calculated as an ‘on paper’ loss against your rental income.

For you, that measn less tax to pay

Example:
Let’s say you earn $30,000 in rental income.
If your tax depreciation report gets you $8,000 in deductions then you only pay tax on the $22,000 ($30k less $8k)

And should the deductions be greater than the income produced, your accountant will mark-off these surplus losses against other icome sources (usually yor job).

…this is known as Negative Gearing.

Once again, this means less tax to pay

QUESTION: How often do i need to buy a report?

Only one time. And it lasts 40-years!

After your report is complete, your accountant will pick up the report nd punch in the numbers each tax return.

Plus… the fee is 100% tax deductible – just like your accountant’s fee

QUESTION: Can we claim for future work on the property?

Yes you can – with my Free Report Updates for life!

…say you add a new air con unit. Or oven. Or repaint the house. Or even replace the kitchen – just let me know the Cost and the Date and I’ll update your report at no cost to you.

It’s completely free!

Finding out how much tax you can save all starts with getting your free estimate

And it’s easily done

Simply fill in this form and you’re done! ⤵️

Name *

First

Last

Phone *

Mobile Phone Only Please - so I can send you quick updates or ask an easy question about your property

Email *

so i can send your quote to you

Property Address *

...so I can provide a guaranteed minimum yearly deduction amount

Comment or Message *

Got some important notes about your property I should know so-as-to give you the best price & most accurate estimate as possible

Send it >>

More reading on why Principal Place of Residence are great for Tax Depreciation Reporting:

Like any type of investment property, a tax depreciation report for your [former] principal place of residence is the best way to reduce your tax bill.

Former owner-occupier homes are usually goldmines for tax deductions.

That’s because we like to make our homes more liveable and spend a lot of money doing so.

I’m guilty of spending far too much on our home but not getting it back come sale-day.

Logic said I should have rented it – not sold it. The tax benefits I could’ve had from all the renovations were way better than selling at break-even.

…But you live and learn.

At least you won’t be as foolish as me and will hold onto your PPOR. That way all those personal renovation expenses can now be claimed as tax deductions.

Yes, any expenses you’ve had since ownership… Plus any expenses previous owners have had.

It’s all claimable when it becomes a rental.

Tricks to Minimise your tax:

There’s three things worth noting about tax depreciation on [former] principal places of residence. I can discuss with you over the phone if you like.

They are…

How to Avoid Capital Gains Tax

All investment properties are up for capital gains tax when you sell. But, there is one way to avoid it when renting out Principal Properties. …do this, and you’ll avoid the tax.

Valuing your property before renting

The ATO will insist on knowing what your place is worth when you start renting it out. You can get this free if you follow this [guide]

Don’t spend a cent on your property until you’ve done this…

New tax rules mean you can’t claim tax deductions for certain expenses done at certain times. Follow my lead here. And you can maximise your tax write-offs

Why your home is a Tax deduction goldmine:

Older properties – especially when it’s been your family home for a long time – have thousands $$$ each year in tax deductions.

But, you really hit pay-dirt when there’s big renovations involved.

That’s because renovations cost far more than a new build per square metre of work.

In fact, renovations usually cost 2 or even 3 times the cost per square metre as a brand new house.

And you can claim all that extra cost in your tax depreciation report to cut your tax bill.

But, even relatively ‘untouched’ houses can have plenty to claim.

Like these ones:

The most common mistake made:

In the months leading up to converting your house to a rental property, you may feel it necessary to do a few minor repairs and touch-ups.

Don’t

You can’t claim them at their full value – and sometimes, can’t claim them at all!

You’re better off waiting until the tenants have been in for a few months – or – doing it all in that vacant window – immediately after you list the property for rent – but before tenants move in.

By doing the works either immediately before tenants move in – or about 6-months after, you’ll be able to claim almost everything as ‘repairs and maintenance’ items at 100% write-off – or – ‘making the property tenantable’ at 100% write-off.

Should you risk it?

If you’re worried you’ll commit to getting a report just to find out it wasn’t worth your while, I have this reassurance for you.

Get a quote and I’ll put together an [obligation free] eye-ball estimate of what you can expect to get in tax deductions.

It’s easily done and doesn’t cost a cent.

I do this online using my RoDara access to research your property.

Plus…

With every quote I’ll provide you with three free ‘big data’ reports all about your property.

With your free quote – you also get – three complimentary property investor reports (tailored to your house).

These reports are not simply slapped together.

They’re generated by RpData’s substantial data mining software. And in the right hands may create a fortune – or save one!

With them you’ll discover…

• • Who’s renting what and for how much [adjust and maximise your rent return for more profit]
  • What’s in high demand [tweak your property to meet tenant needs and have them queing to sign up – then profit from the extra demand – before your neighbours do]
  • Is your suburb booming, flatlining or about to take-off [Get ahead of the trends & maximise profits – or – look like a genius and sell out before the crash]

“If you were to order these yourself, RpData would charge you $80”
…But you can have them today – free – simply for getting a quote

You don’t even have to be a customer. They’re yours as a gift, no strings attached.

That’s because I don’t think you should have to buy a depreciation report just to get this valuable information.

I’d rather you make the best-go of being a property investor…Customer or not

If you’ve read this far – thank you – as I’m now sure of one thing. Saving your hard-earned cash from unnecessary taxes is very important to you.

So to keep your money in your pocket and not waste it on avoidable taxes…this is your next [simple] step…

Get in touch and Get your tax refunds

Simply get in touch below and I’ll get back to you with everything you need to know

• • • • Your Quote
      • Your Guaranteed Deduction baseline
      • Your Sample Report
      • Plus your 3-free property reports I mentioned earlier

I’m very responsive to emails – day or night…much to my wife’s chagrin
I’ll even email you a sample report for a property not too dissimilar to your own

Get Your Quote Here

Note: I’m not in the business or wasting anyone’s time or money.
When you get in touch I’ll tell you quite accurately how much tax you can save each year.

Then I’ll leave it up to you to decide your next move.

What to do next…

Not sure if you need a tax depreciation report?

…the next thing to do is ask me

It’s free

I’ll use my RpData access to research your property and let you know if there’s enough claimable deductibles.

Name *

First

Last

Phone *

Mobile Phone Only Please - so I can send you quick updates or ask an easy question about your property

Email *

so i can send your quote to you

Property Address *

...so I can provide a guaranteed minimum yearly deduction amount

Comment or Message *

Got some important notes about your property I should know so-as-to give you the best price & most accurate estimate as possible

Send it >>

P.S. Your tax depreciation report is also tax deductible, just like your Accountants fee

Why Choose Us?