The numbers are available, with an analysis by Washington Brown revealing that over 82% of investment properties do not require a physical inspection to establish a depreciation schedule that will allow investors to claim the tax deductions maximum authorized.
The depreciation expert assessed 15,370 individual investment properties in Sydney in the year since the pandemic and found that 12,698 – or 82.6% – of the properties did not require inspection to achieve maximum damping.
Washington Brown CEO Tyron Hyde said that previously every property had to be physically inspected so that depreciation experts could assess both the building and the equipment, such as dishwashers and ovens, individually, but that was the way of the past. .
"The changes to the law in 2017 were the catalyst for change, with real estate investors now unable to claim depreciation on equipment that is not new," he said. .
"Now for used properties, you can only claim depreciation on the building structure, like concrete and bricks, unless you have renovated.
"If you buy new items like rugs and blinds you can still claim depreciation, but it should be based on the purchase price rather than an estimate, so you can provide those numbers to a depreciation expert, without an inspection being necessary.
"Since depreciation can only be claimed on the building structure for used properties, it is very likely that there are already records of home inspections. Previous depreciation, and that's another reason why a physical inspection is probably not necessary.
“In 40 years, we have accumulated an extensive database of construction costs for the majority of residential and commercial buildings in Australia.
“As an example, Washington Brown works with the Meriton Suites World Tower apartments in Sydney; we have been there over 500 times for inspections and have the original costs, plans and specifications.
"Nothing has changed in the structure of the building, so there's no need to inspect it again, and there's no need to pay someone to do it.
“It's the same scenario for thousands of unit blocks that we have been involved with. "
Mr. Hyde said about 17.4% of properties still required inspection, like luxury homes, but typically standard apartments in a block of hundreds don’t ; would not need to be inspected.
"At Washington Brown, we analyze each property before recommending a course of action and determining what is best for each client, rather than saying that every property needs to be addressed. 39; an inspection, which some quantity surveyors do, "he said.
"If an investor is told that every property should be inspected, know that this is not the truth – the quantity surveyor will act in his own best interests, rather than in yours.
“The numbers don't lie. The facts show that we don't need to physically inspect every property for maximum tax deductions to be claimed. In fact, the truth is that the vast majority do not need a physical inspection.
"In addition to our analysis, the Australian Institute of Quantity Surveyors confirmed this with CEO Grant Warner confirming the following to us in writing:
"I would like to confirm that AIQS (or the legal opinion we requested) does not make any statement regarding:
how tax depreciation reports are to be prepared by quantity surveyors;
what the quantity surveyors are able to estimate;
whether the original or newly appointed surveyors are best equipped to estimate certain construction costs; or
physical inspections being required to complete a tax depreciation report.
The benefits of not having a physical depreciation inspection are that you'll save both money and time, Mr. Hyde said.
"If your property doesn't need a physical inspection for an amortization schedule, the good news is you'll save up to $ 300.
"Not only will it be cheaper, but you will also receive the report faster.
It also means you can have a 'contactless' report, without anyone entering your property and disturbing your tenants, which is a big plus during COVID – especially during a lockdown like this that we are currently living. "
