Did you know that the little guys in the garden can be earning you some money at tax time? We discover what else – apart from garden gnomes, you can claim as a depreciable item at tax time. Brad Beer joins us to discuss that.
Kevin: I’ve often wondered with depreciation schedules, what items are commonly missed? Are there any? I thought we might just give you a bit of a reminder now. Brad Beer joins me from BMT Tax Depreciation.
Good day, Brad.
Brad: Hi, Kevin. How are you today?
Kevin: Good, mate. You heard that introduction. I’m just interested to know if there are any items that are maybe commonly missed when people are claiming depreciation that you’ve noticed, Brad.
Brad: We’ll talk about some of those items, but the biggest thing is making sure that everything gets looked after and done properly. When we do these things, we go to site to identify things and make sure we maximize those deductions.
I guess some of the things that are missed are things like garbage bins, sometimes exhaust fans. Free-standing garden shreds are an item that you claim as plant and equipment that are often missed, and things like in pools and spas, the pumps and things. Unusual things like garden gnomes are depreciable or other unusual garden statues.
Kevin: Garden gnomes. Is that right?
Brad: They’re a loose item, and if they’re just sitting there as an item of what’s seen as plant that’s helping to produce income because this person rented your property because it has really nice garden gnomes in the yard, then it’s seen as a plant and equipment item and it’s claimable.
Kevin: It’s probably fair to say that in most cases, if you were to do a proper site inspection, you’d always find something that was missed, Brad. Is that a fair comment?
Brad: We always suggest a site inspection of the property, and it’s not just about missing items, but that’s one of the benefits of making sure it is done properly. Making sure that we identify everything that’s on site that we can claim as quickly as possible. Making sure that they’re legitimate things that we do claim is important because they all add up. Some of those things aren’t worth heaps of money, but a couple of hundred dollars here, a couple of hundred dollars here all add up to more deductions in those early years.
At that site inspection, also it’s important to make sure when we are estimating that construction cost of the building, even if we do have the plans, we get to really have a good look at the type of construction that’s there. If there’s anything special about it in any way, it’s a good opportunity to pick that up.
If there’s been any renovations done to the property, especially if they’re done by a… Because if you did renovations, you’d remember what you did and say, “I put in a new kitchen and bathroom.” But someone else may have put a new kitchen in there ten years ago, and when go to site, we’ll identify that that’s the case. We look at that kitchen and go “That’s not a 30-year-old kitchen; it’s a 10-year-old kitchen.” It just means that more things get picked up that are claimable.
And it’s not only those plant and equipment items, but it’s everything within that property. When you go through trained with an eye to look for the right things and be thorough, you end up finding more things and therefore that results in higher deductions and obviously, therefore, better cash flow for the property owner.
Kevin: Yes. Good property investors are constantly tweaking their properties to make sure they’re getting maximum return out of them. How often should they have a site inspection? In other words, there might be other things that we just forget to tell our accountant about. How often should we get you back to review the depreciation schedule?
Brad: Once we do it once for you, other work that you do, you just need to make sure to keep those receipts and update in the future. We don’t normally need to come back unless you do a major renovation and we need to split up those items between that building and plant and equipment.
We launched a portal to manage your depreciation called MyBMT only just in the last couple of months. Now, as you do something, if we’ve already done that depreciation schedule, you can add these items and adjust it and write these things off. It’s a very simple process. Either you can actually put the information yourself or we can have a look at it and put some cost expertise, or if there’s enough work, we can organize that inspection to have it looked at again.
Kevin: That schedule you mentioned there on your website, anyone who’s had a depreciation schedule done by BMT Tax Depreciation, will they automatically be there or do we have to do something to get on there, Brad?
Brad: MyBMT is something that has a login that you’d need to join. Whenever someone buys a depreciation schedule from us now, obviously, we offer a login to that, and they get to see transparency through the process of what’s happening with that depreciation schedule, firstly.
They can invite their accountant in, so their accountant can see that. The accountant can see all the schedules of all their clients in the same place under their login. Then in the future, as you update things, it updates that depreciation schedule for those future years.
You can look at whichever year you want to, one year at a time. Very much a simplistic tool where you’ll never need to go looking for a file. If you have a whole lot of properties or the accountant has lots of properties with lots of clients, they’ll be able to log in and as long as the client said, “Yes, you can see it,” Then they can get transparency and updated numbers each year, which has been a dream for a long time.
It’s what we call a live depreciation schedule, and this is the result of lots of IT time put into what is really a live document going forward as opposed to one document that as you change things, does change.
Kevin: BMT Tax Depreciation. There’s a button on the homepage at Real Estate Talk and also the BMT channel as well. Lots of great content there. I can just see all those people now with garden gnomes racing out to get that organized, Brad. Good on you, mate.
Brad: Absolutely. Thanks, Kevin. Great to be here.