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Any Time You Own a Rental Property a Tax Depreciation Schedule Is Necessary

If you have a property that you are renting out or leasing, and this property is producing income, it is a good idea to employ a Quantity Surveyor to produce a tax depreciation schedule. Whilst it is not a mandatory requirement, you will find that the benefits far outweigh the costs.

Business Tax Depreciation Schedules Will Save You Money

There are many different scenarios where you may need a schedule or report. For example, you could be a property investor who has a portfolio of properties and have never done one before, or you could have just purchased your first investment home. In either of these instances, an investment property depreciation report can save you money every year at tax time.

Renting Your Old Home Means Property Tax Deductions

Recently, due to the depressed property market, a lot of people have been unable to sell their houses and instead of selling at a loss now, decide to buy a new house. They end up keeping the old one and rent it out to others. Even if you have an old house and never realised that it was worth, getting a report will certainly surprise you with what is remaining and claimable.

Accounting for Tax Depreciation Following Remodelling

Have you done some recent renovations or additions? If so, this is a good time to bring in a quantity surveyor to look at the construction costs for tax depreciation purposes and to produce a new report. The improvements are deductable and can greatly increase your cash flow. Do you have a business that contains plants and equipment? A motel, hotel or cafe? All items used to produce an income are tax deductable and should be included.

These Schedules Are for Every Investor

What you need to realise is that it is not just large investors that should be taking advantage of this kind of service, but also the average mum and dad investors. If you have a rental property, you should get a house depreciation schedule. It will greatly increase your cash flow and when it comes to tax time every year most people will get a nice tax refund.

Making the Most of Your Money

Given the fact that you are renting your house as a means to earn money, you need to take advantage of a house depreciation schedule to help ensure you are not paying too much in taxes each year. With our careful accounting, we are here to help ensure you never overpay your taxes. Once we have established your schedules, you may even find that you qualify for a refund each year. Contact us today and let us show you how we can save you money.

Building In Queensland, difference’s between Australia and New Zealand, Part 2

In my last column I briefly talked about the differences in building at the pre-construction stage, I will now talk more about specific construction and the differences between the two countries.

Both countries are predominately light timber frame construction for residential housing, the methodologies are almost identical with a few differences that can catch out an experienced Builder. First of all materials are generally cheaper in Australia, concrete, timber, plasterboard and aluminium joinery are the big ticket items that can have a big cost saving. Unskilled labour is more expensive in Australia however skilled trades such as Carpenters, Plumbers, Electricians etc are generally the same. If you were to build a standard single storey residential house in Australia it would be around $100 a m2 cheaper to build than in New Zealand.

Below is a step by step guide to the building stages and the differences between the countries:

Fees and Council Costs : Queensland is cheap compared to New Zealand, especially Auckland. Councils still issue building consents in NZ and expect to pay up to $5000.00 for a building consent, also in Auckland you are expected to pay an additional levy of $6500 for all new residential houses, if you dont pay the levy, you will not receive a final code of compliance and you cant sell the house. In Queensland, private certifiers issue building permits and the average price is around $2000.00, don’t forget, that Queensland has compulsary home warranty insurance through the QBCC, that all home builders have to pay, this is usually around $2000.00. There is also an extra levy payable to Qleave which is a compulsary transportable holiday scheme for contractors, this is worked out on .525% for the build cost, about $1000.00 for a small house. NZ does not have compulsary home warranty insurance or contractor holiday schemes.

Set up of Site :The first thing most Builders would do before building a house on a vacant block of land is to set up the temporary power, water, temporary fencing and site toilets, nothing exciting here however most new subdivisions in Queensland, particularly Brisbane have water meters already installed by the land sub-divider. This is not the case in New Zealand, most vacant blocks of subdivided land don’t have water meters and will have to be installed by the land owner or the Builder, budget for around $5000.00 for this.

Temporary fencing and site signage is important in both countries however it is even more important in Australia, living in Australia, people still have the right to sue for personal injury, In NZ this right has been removed by the Government insurance scheme the ACC, the Accident Compensation Corporation. If anyone gets injured on your site in Australia its extremely important that you have Public Liability Insurance. People will sue you for their injuries and you can personally be liable for hundreds and thousands of dollars of damages. You can organise this insurance at the same time you buy contractors all risk insurance to cover the building works.

Concrete Slab Construction:Both countries are similar however Australia tends to use common bricks as formwork while NZ tends to use more masonry block construction, waffle pods or rib raft slabs are both popular and are almost identical.

Termite Protection:Usually done at slab time, it is mandatory in Australia and extremely important, New Zealand dosnt have any termite problems and is not used. Typically allow $800-$1000 per house for this.

Timber Frames:This is the preferred method of construction in both countries, Australia tends to use more 70 x 40 timber framing with 1 row of nogs while NZ uses more 90 x 40 with 2 rows of nogs. The framing in both countries is predominately Radiata Pine and comes in untreated and treated, NZ timber treatment is more concerned about fungus and borer control while Australia treatments are more about termite control, hardwood timber is also more widely used in Australia as being a good termite proof wood, hardwoods are extremely expensive in NZ and not used a lot.

Plumbing and Drainage: New Zealand uses it owns system called G13 and a little bit of AS3500 which is the Australian system . The NZ method uses external gully traps while the Australian method uses a lot more waste traps inside the house.  As New Zealand gets a lot of rain and Australia not so much, the requirement of water-tanks and pumps are mandatory in Queensland, a single residential house will require a 5000 litre tank and pump, plumbed into the toilet cisterns and laundry taps. Expect to spend extra $2500.00 to install one of these. There is no requirement for water tanks in NZ.

Electrical: No discernible difference between the two countries.

Insulation: In Queensland you will need to have an independent consultant to do an energy efficiency report for all new houses, the minimum requirement is now 6 stars, they will look at the design of your house and take into consideration all of the house design, ie window sizes, glazing, orientation, roofing and insulation. There is no mandatory requirements for insulation however most builders now would put in a minimum of R1.5 batts to walls and R2.5 to ceilings . NZ requirements are more prescriptive under the building code and are dependent on where in NZ you live, ie the south island is a lot more colder than the north and will have an higher rating requirement.

Bracing: There are big differences in the design of bracing for residential houses in both countries, Australia is more concerned about wind loads and cyclonic areas while NZ has to consider not only wind loads but also earthquake loads. There are many different types of bracing board and tie down requirements in both countries, Queensland tend to use hardwood plywood with cyclone rods to hold down timber frames while NZ use more Winstone Braceline Plasterboard with dynabolts to hold down timber frames. For bracing requirements the NZ building code is AS3604 and the Australian one is AS1684.2 .

Aluminum windows and doors: There are many different profiles in both countries and the prices can vary, the windows in Australia will normally come to site with  DPC stapled to the windows in the factory, NZ builders tend to do this themselves on site. Another interesting aspect is that the window jambs in Australia are only suitable for architraves, NZ windows and door jambs are mostly grooved so that plasterboard can slot into the window reveal removing the need to use architrave.

Prehung doors: NZ prehung doors are a popular method of installing interior doors, I think you would find most kiwi builders would not even remember how to hang a door from scratch, they come from the factory fully assembled. In Australia they are still called prehung doors but are actually a jamb pack and door, they still have to be assembled on site, also the use of architraves are common and no one uses grooved jambs in Queensland.

Air-conditioning : Most new houses in Queensland would have at least one air-con unit, air-conditioning is extremely popular in Queensland, it gets extremely hot and humid here, in NZ, air-con units are not used that much are more of a luxury item than an essential requirement. Units vary from 2.6 KW to around 7 KW for a single split unit, expect to pay up to $2000.00 for a decent one and factor in another $600 to install it, remember on new houses to get a separate isolator switch set up by the electrician for this.

Roofing: Long run colour-steel roofing is popular in Queensland but they do also use concrete tiles. In NZ, concrete tiles are the most popular form of roofing, the roof tiles are attached to the trusses without sarking or building paper, In Queensland most concrete tilers use sarking under the tiles. Another thing to consider is that the roofing companies in Australia do expect a lot of the flashing’s to be done by the Builder or Plumbers and will not do this themselves, in my experience in NZ the roofing companies guarantee their product more and will do the lead and flashing’s themselves.

Scaffolding and edge protection: This is expensive in Australia more so than NZ, if building a 2 storey house, dont expect to spend less than $8000.00 for all the scaffolding and protection required. New requirements are changing in Australia very soon and even single storey houses will need edge protection for the roofers.

Cladding: Most of the cladding is the same, typical fibre cement boards or brick veneers are popular in both countries and even have the same suppliers and manufacturers, one thing to look out for is the brick sizes, Austalian uses the wider 110 mm wide brick while NZ uses the slimmer 70mm wide brick, its important to know, especially when you are setting out your brick rebate in your concrete slab.

Building In Queensland, differences between Australia and New Zealand

Being a Quantity Surveyor in New Zealand and then moving to Brisbane, Queensland in August 2008 had brought up many new challenges and experiences. I have often been asked for help and I thought it would be a good Idea to put pen to paper. This article is more from a perspective of a Builder or Developer from New Zealand looking at moving to Queensland and finding their way around.

One of the first things you may find out if you are buying land in Australia is that it’s called a Block, not a Section as commonly known back in NZ, I have often had blank looks from people when I mention I am interested in buying a section!

There is also a greedy thing here called stamp duty , it’s mainly payable on Land and Cars and is a tax on legal documents, an average block of land in Brisbane will cost about $240,000 and the Tax on that would be around $2500.00, it seems to be different for each state and can be quite confusing, its best to look at local government websites such as http://www.osr.qld.gov.au/duties/about-duties/rates-of-duty.shtml

Remember it’s a tax on legal documents, it’s important that you get the ownership name right the first time, I have heard of one poor person that was advised incorrectly about the structure of his business, buying some land and then having to change ownership, he paid $20,000 stamp duty initially on his land but then had to change ownership and was stung with another $20,000!, ouch! It was still owned by him but just in another name.

The Australian Government loves bureaucracy, it decides to take away money in stamp duty but then gives it back you in a first home owners grant, yet again it is different in every state and you need to look at the various city council websites. At the moment in Brisbane its $7000 for the central areas but if you invest in more far-away places they give you another $7000. I mean so far away, that nobody wants to live there! It’s only payable to people who are buying their first house.

If you are looking at building in Queensland then you will need to become very familiar with the QBCC or Qeensland Building and Construction Commision, if you want to build in Queensland then you must be licensed through the QBCC, It’s not easy being getting this licence either! . If you have NZ qualifications and you try to get the QBCC to recognise them, they won’t!  They will tell you to go to an organisation that recognises your qualifications, what they don’t tell you, is that this organisation only advises that your qualification is of a similar level to an Australian degree, it will not tell you if it matches the QBCC standard requirement for a residential builder, which is a Certificate level 4 in Carpentry. Don’t waste your time doing this!

There are 2 other options, the first one is called RPL, Recognition of Prior Learning,  someone from this organisation, will look at your Qualifications and Experience and try to match this against the learning outcomes for the Certificate 4 in Carpentry, which is the minimum required course. I went through this process and could have had about 7 courses knocked of my requirements; it’s a 1 year course which meant I could have finished it off in probably 6 months.   Remember this is only a for a residential builder less than 3 storeys, if you want to do anything bigger like commercial building then you will need the advanced Diploma which is 2 or 3 years full time.

Now the easy option and one that I recommend, if you haven’t already got your Builders Licence in NZ, then get it now!  Only in the last year has Queensland started to have a mutual recognition for Builders from NZ, if you have a NZ Builders licence, then all you do is fill out a simple one page form, pay the fee and within 2 weeks you will have your licence.

Ok, you want to start building? Check out the QBCC requirements again, they will not let you go and just build as much as you want; they will want to control even how much your turnover will be!  If you are doing any building work over $3300 then you will need a contract and have to pay a BSA Home Owners Warranty, which is around $900 per every $100,000. It’s important to note that this compulsory insurance / tax is not for the builders benefit, it’s for the home owner, just in case you go out of business, building the house or there are future structural problems.  It’s kind of similar to the Master Builders Home Warranty insurance but administered by the BSA.  You will still need to organise your own Contractors Risk Insurance to cover for loss or damage on your building site.

What now? You want to start building straight away? Aha, another tax is payable before you can start and this is called Q-leave or Queensland Long service portable leave. Basically you are providing money for your contractors to have a holiday leave scheme, at present it is .525 % of every $1000. If you can and most contracts I have seen, don’t include this in your building contract, get the home owners to pay it, it is normally payable upon lodgement of plans. Lodgement of plans, lodge with council right? No I ‘am afraid not, you will need to lodge them through a private certifier, most charge around $2000.00 for a typical residential home.

Another big Tax or Levy sometimes payable is a Head-works fee, or commonly known as a resource consent fee back in NZ, if you are building more than one house on a block of land then you will need a Development Approval, this DA will tell you the Head-works payable. I have seen some DA approvals with more than $25,000 for each unit over the existing allowance.

I knew a Developer that purchased an old house, demolished it and put 4 new units on the same land. The land originally had one house but because he put 3 new units on that land he had to pay 3 x $25,000 for the privilege.The Head-works fee goes up every year so it’s best to check out the council websites or speak to a town planner to find out the true costs.

One more thing for now, GST is different; it is only 10% in Australia not 15 % as back in NZ

In my next blog I will talk about the differences in construction between Queensland and New Zealand, it is similar but can be quite different.

Insurance Replacement Cost Estimates

Coming soon, keep an eye out for our new services.

www.replacementcost.com.au

Insurance Replacement Cost Estimates

Coming soon.

www.replacementcost.com.au

Budget Tax Depreciation are now on Facebook

We are getting with the times and are now and Facebook, keep a look out for our new developments

in regards to Tax Depreciation Schedules.

http://www.facebook.com/pages/Budget-Tax-Depreciation/147163012020757