Don't waste time and resources trying to determine whether a depreciation schedule will be worthwhile for your client's investment property. Outsource to our experts to get a quick, free, reliable estimate.
One of the great services we are pleased to offer your clients and the broader investment community is the ability to have a free estimate of deductions calculated up-front. This ensures that clients or advisers who feel uncertain of the benefits for them personally can make an informed decision. Our estimates are completed personally by our experienced team and estimate deductions for the first 12 months and 5 years of holding the investment.
Why get a depreciation estimate?
Sometimes investors and advisers are unsure about the value of a depreciation for their investment property. Established residential properties typically create the greatest concern or confusion for investors and their advisers. If the property is an older construction and doesn't appear to have had much work done, then many advisers may caution against the value of a depreciation schedule altogether. If you get this wrong, this could be costing your client thousands of dollars in lost tax deductions. Getting a free estimate up front means nothing to lose and potentially thousands to gain.
How we calculate a depreciation estimate
The tools we use to determine a reliable estimate are:
- Paid property databases (PriceFinder) - through our paid subscription to PriceFinder we can often use images taken of the property over time to identify and date extensions, improvements, and upgraded assets;
- Council - council websites or office staff share information related to approved developments and extensions/major capital improvements that we can use to inform our estimates;
- Google Earth - this useful tool can assist with dates for construction, extensions and capital improvements;
- Discussion with the owners and people familiar with the property (sales agents, property managers) - these key individuals can often share information they have learned about the property, and importantly any work they have completed on the property themselves.
Based on information sourced from the above, we can establish reliable depreciation estimates creating peace of mind for you and your clients. And the best part is that these estimates are individualised and not created by a generic depreciation calculator.
What properties do we typically rule out up front?
Firstly, we never rule out properties just because they are old. In our experience, most old properties have undergone some upgrades and capital improvements, specifically in terms of plumbing and electrical, kitchen and bathroom upgrades, paint, rooves, additions such as garages and decking etc. In most cases the majority of assets have also been upgraded at some time and photos can typically provide information to inform that. For properties purchased prior to May 9, 2017 all second-hand assets can be assigned new values and effective lives and will considered in our estimates. This means that at least 95% of all properties we are asked to assess generate substantial depreciation deductions for their owner.
Having said that, the properties we tend to rule out upfront simultaneously meet ALL THREE of these criteria:
- constructed more than 30 years ago; AND
- have not had any capital improvements undertaken during the last 30 years; AND
- were purchased more than 10 years ago, or since 9th May, 2017.
When a property meets all three of those criteria, any depreciation benefits to the client are unlikely and we would advise against proceeding with a depreciation schedule.
If we don't believe we can generate at least $2,000 in the first year of claims to ensure immediate return on investment for the client, we would also advise against proceeding with a schedule.
If we complete a schedule and have been unable to meet that guarantee of $2,000 in the first year, we will not charge for our services. A depreciation schedule is intended to boost cash flow, not leave an investor out of pocket.
What about estimating depreciation for brand new properties?
Brand new properties are much easier. New residential properties typically generate an average of $11,000 - $13,000 in deductions in the first full year, and tens of thousands of dollars in deductions over the first 5 years. A quick review of the property online, along with any information provided by the owner allows us to provide a reliable estimate in this case.
Can you estimate depreciation deductions for commercial properties?
Whilst this process is a little more difficult given the vast array of commercial buildings, we can provide broader range estimates based on discussions with the owner and industry benchmarks. We can conduct more comprehensive estimates if provided with lease and contract details that outlines an inventory of assets. We have a high level of expertise most specifically in hotels/pubs, hopsitality and accommodation, child care centres, aged care centres, medical suites, warehouses and professional offices. We offer free consultation for all commercial property owners and their advisers and can provide examples and case studies of previous results achieved.
If you'd like to discuss how depreciation may benefit your commercial property owner, contact Alex or Mark on 1300 922 220 or email Alex on [email protected].
For residential properties, give our team a call on 1300 922 220 or use the handy online form by clicking below.
We look forward to being of service!
Find out more about Capital Claims Tax Depreciation
When it comes to ordering quality depreciation schedules many accountants and property professionals know there are limited options available. Capital Claims Tax Depreciation is a leading, national provider of depreciation schedules. To learn more about us visit our About Us page here.