The Block To Spur Renovations This Spring
By Bradley Beer on 5 Sep 2014
No Comments yet, your thoughts are very welcome
Photo: Emmanuel Rios, WikiCommons
Economic research undertaken for The Saturday Age suggests popular reality television show The Block has a statistically significant impact on the economy when it comes to renovations.
Each time the series is broadcast, renovation spending across the nation gets a $251 million boost.
So with spring in the air, low interest rates and the current series of The Block airing on our television screens, it’s almost a given that Australians will be spending big on their renovation projects.
Be Aware Of The Tax Deductions Available
People are investing in renovation projects on their properties as an alternative to a complete upgrade. And investment property owners are often unaware of the tax deductions available. It is possible for Australians to claim thousands back after renovating a property which generates income.
Renovations can be expensive, so it makes financial sense to take full advantage of the tax depreciation deductions available.
“Each time the series is broadcast, renovation spending across the nation gets a $251 million boost.”
As a building gets older, items wear out – they depreciate. The Australian Taxation Office allows property owners to claim this depreciation as a deduction.
Depreciation deductions can be claimed by any property owner who obtains income from their property.
Making The Most Out Of Tax Deductions
To ensure property owners are making the most of the tax deductions available, they should consider a pre-renovation depreciation schedule.
Old assets within a property can be worth thousands of dollars. When these old assets (like carpet and hot water systems) are removed, the owner may be entitled to claim them as a tax deduction.
“Renovations can be expensive, so it makes financial sense to take full advantage of the tax depreciation deductions available.”
A Quantity Surveyor, who is qualified to calculate values and construction costs, can ensure the owners are not throwing dollars away.
Essentially, if an item is removed or replaced as a result of a renovation, the current value of the item can be written-off as a tax deduction in the year the expense is incurred.
What Does A Quantity Surveyor Do?
A Quantity Surveyor will complete a schedule prior to a renovation or refurbishment to identify the value of all assets already existing within the property.
A second schedule is then prepared after completion of the renovation, identifying the value of all new assets within the property.
The removed assets can be written-off immediately. Depreciation deductions are also available for the structure of qualified buildings.
Any construction (such as a new roof, walls or ceiling) carried out after September 1987 (residential property) and 20 July 1982 (non-residential property) is eligible for the capital works allowance (Division 43).
A Quantity Surveyor who specialises in tax depreciation will always take into consideration renovations carried out by previous owners as this becomes an additional tax benefit for the current owner. Always consult a depreciation expert about an investment property’s depreciation entitlements.
Taking full advantage of the available tax benefits on an investment property can improve a property owner’s cash flow each financial year.
