Every week or so, we are contacted by an accountant with what they think is an unusual request – something that has nothing to do with a Depreciation Schedule.

After doing this for nearly 25 years, few things strike as unusual.

These accountants are doing some CGT calcs for a recently sold house and need our help estimating some historic construction costs to hopefully reduce the CGT payable.

The conversations start the same way, ‘We’ve used you guys for Depreciation Schedules forever, but we’ve got a problem and an unusual request…’

They’re not the only left-of-field things we do. Calculating the residual (and claimable) Capital Works in a property about to be demolished is another fairly regular one.

Did you know we do free updates? Forever?

And strange as it sounds, we set ourselves apart by having sensible informed conversations with your clients. Other providers don’t do that – with some, there isn’t even anyone to talk to.

Do you have a client you want us to talk to? We’re good at it. Just make an enquiry here.

Key Points:

1. 1. Help with CGT letters by estimating the initial and subsequent improvements of a building to offset capital gain taxes. 
2. 2. Estimate residual value in Capital Works for knockdown/rebuilds, partial demolitions or commercial fitouts with a Disposal letter.
3. 3. Free updates to your client’s Depreciation Schedules with any improvements to keep them up to date. 
4. 4. We’ll have a sensible conversation with your client so that you won’t need to (hopefully!)

Help with CGT letters

We are increasingly being asked by accountants to help with their CGT calcs. Perhaps it’s a sign of the much predicted boomer wealth transfer? Often it’s a holiday home being sold and the scenarios can be eerily familiar.

A block of land was bought in the 60s or 70s and a  holiday house built on it. Invariably, it was a pretty simple house back then. But over the years it was added to as the family grew – a second storey, perhaps. A shed for sure. Maybe a large covered outdoor eating and cooking area.

Then the kids stopped wanting to go on holidays with mum and dad. And mum and dad started to use the house less and less, so it was put on the short term rental market.

Now it is being sold and there is CGT owing that the family weren’t expecting.

So we get asked to estimate the cost of the initial building and subsequent improvements. Occasionally we need to visit the property and one of our Quantity Surveyors gets to take a pleasant drive, but often there is sufficient information available from the family for us to do our job without a pleasant drive.

We could be the only provider that can help accountants out in these scenarios.

Estimating residual value in Capital Works with a Disposal Letter

Another thing some accountants ask our help with is estimating the residual value in Capital Works they are being disposed of. We’ve written about this previously here.

We do this for both residential and commercial properties.

There are two typical scenarios with residential properties.

The first is where someone has been renting a post 87 built property for a while and they plan to knock it over and build two dwellings on the land to rent out.

There is residual value in those Capital Works that the accountant wants to claim when they are disposed of. Last week we looked at one of these for an accountant. It was a 2002 built home and we calculated the residual value of the Capital Works as of demolition date to be $93,450. That’s a lot of value going into a skip – way too much to not do something with.

Another scenario is a partial demolition. Often these are 90s rental properties where the client wants to demolish the bathroom, kitchen and laundry. Often those rooms are tired and the property is becoming harder to rent out.

There is residual value in the bathroom, kitchen and laundry being stripped out. Sure, not as much as a whole house, but there could easily be $10,000 left in those rooms. Pity to not claim it.

With commercial properties, it is fitouts, of course, that get disposed of. And there can be a lot of value left in them. It’s not unusual for a fitout to only be in place for 10 years before being disposed of.

Free Updates to your client’s Depreciation Schedule

We have always updated our Depreciation Schedules for clients.

For almost 25 years.

At no charge.

We have some clients who come back to us every year and ask us to add Assets and improvements to their properties. Others come back every few years when they do major work, like new kitchens. Read more on how to do this here. 

Often repair costs are mixed up with improvements – we write regularly about repairs, most recently here. When there are costs in the mix that we think their accountant might be able to claim as repairs, we let them know. That saves you having to make the distinction.

We know the ATOs definition of repairs and how both the nature of the work and the timing need to be considered. 

Of course, we don’t give advice. That’s your job. But we will give our opinion.

Sensible conversations with your clients

Your clients sometimes like to have a chat.

And we’ll oblige. We don’t charge by the hour.

We’ll sometimes back up a few steps and explain what depreciation is and where it fits into the tax picture. That is usually in response to someone who calls up and says, ‘My accountant said I need a depreciation tax quantity report thing. What are they talking about?’

We also have chats about repairs vs improvements. And how to treat Special Levies – we have written about this most recently here.

Of course, we’ll talk to your client about their property to make sure it’s worth claiming depreciation – often we can estimate the depreciation for them in that first phone call.

Even after they get their Depreciation Schedule, some clients call to ask questions and occasionally wants us to walk them through it.

Other providers don’t do that.

And every conversation we have with your client is one you don’t need to have.

Enquire now for a property-specific assessment

Has this article reminded you about a client’s investment property? Residential properties, commercial properties, even farms, we do them all.

If you want us to talk to a client about a Depreciation Schedule, make a no-obligation enquiry and rely on our 20-plus years of experience in estimating depreciation returns.