Powered by MOMENTUM MEDIA
realestatebusiness logo

Breaking news and updates daily. Subscribe to our Newsletter!

Home of the REB Top 100 Agents
Breaking news and updates daily. Subscribe to our newsletter

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.

rpm logo latest

Scrap that!

By Sarah Latham
14 October 2015 | 1 minute read

We've most likely all heard of a tax depreciation report, but have you ever heard of a scrapping report?

I recently had a chat to the team at BMT Tax Depreciation and learned some key factors I thought might be of interest to you.

If your clients are considering a renovation, it is essential that they consult with a quantity surveyor such as BMT. They can assess if there is any residual value in the items they are planning to remove.

'Scrapping' is a situation where you are removing an asset before its effective life has ended. If there is a residual value in the assest, in many cases your client can claim this remaining value instantly, rather than writing it off over many years as they normally would.

An example of this, according to BMT, would be as follows: carpet has a 10-year effective life, meaning that if using the prime cost method of depreciation, your client would claim the carpet at a rate of 10 per cent for 10 years. Hypothetically, let's say that the carpet has a value of $2,000. After one year, your client can claim 10 per cent of the value as a deduction ($200), so the residual value is $1,800. If for some reason, they remove the carpet after the first year, they can claim the residual value (i.e. $1800) in the year it is removed.

In this sense, not claiming scrapping could be the equivalent of throwing thousands of dollars in the skip bin.

I am told that:

  • The property must be a rental property/available for income to claim scrapping/depreciation.
  • Consultation with both a quantity surveyor and accountant is recommended when considering a renovation and/or scrapping assets.
  • It is imperative that an inspection is carried out on the property prior to the assets being removed.

Something to consider if/when your clients are next looking to tackle a property upgrade.

Scrap that!
Sarah Latham
lawyersweekly logo

ABOUT THE AUTHOR


Sarah Latham

Sarah Latham

Sarah has over 20 years’ experience in property management on Sydney's Lower North Shore. She previously managed a large property management department for eight and half years until mid last year when she made the decision to team up with an ex-colleague of hers, Jaala Cusack, and open her own boutique property management business called Latham Cusack Property Services. Based in Cremorne, they manage properties along the Lower North Shore. Their main focus is to offer a more personalised and proactive style of property management – one dedicated to listening to and meeting their clients’ individual needs.

Listen to other installment of the Real Estate Business Podcast
Rankings
rankings
JUST RELEASED
May 09, 2022

REB Top 50 Women in Real Estate 2022

REB is thrilled to present the Top 50 Women in Real Estate 2022 ranking, which sets t ... LEARN MORE

rankings
JUST RELEASED
May 04, 2022

REB Top 100 Agents 2022

Now in its second decade, the REB Top 100 Agents 2022 rankings are the most revered s ... LEARN MORE

rankings
JUST RELEASED
May 02, 2022

REB Top 50 Agents NSW 2022

Even a pandemic has not put the brakes on the unstoppable property market in NSW, whi ... LEARN MORE

rankings
JUST RELEASED
April 27, 2022

REB Top 50 Agents VIC 2022

The COVID-19 crisis has not deterred the property market in Victoria, which has been ... LEARN MORE

rankings
JUST RELEASED
April 25, 2022

REB Top 50 Agents QLD 2022

As the property market continues to roar in Brisbane and Queensland, the REB Top 50 A ... LEARN MORE

Coming up

rankings rankings
Do you have an industry update?

top suburbs

12 month growth
Mirador
103.33%
Bawley Point
98.13%
Walla Walla
90.7%
Byron Bay
86.67%
Kiama Heights
85.93%
Greta
84.14%
Nulkaba
81%
South Hobart
78.78%
Diddillibah
76.25%
Lennox Head
73.98%
SEE AREA REPORTS ON SMART PROPERTY INVESTMENT WEBSITE
Subscribe to Newsletter

Ensure you never miss an issue of the Real Estate Business Bulletin.
Enter your email to receive the latest real estate advice and tools to help you sell.