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Tarby777

Depreciation report for a UK property

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Hi all,

 

Having established in recent threads that depreciation reports are a great way to minimise tax on rental income, I'm really struggling to find a company in the UK that is aware of the ATO's requirements for such a survey, or is even familiar with the idea of depreciation reports for domestic properties. I've tried e-mailing two different guys at Davis Langdon, which is the only UK company I could find who seem to offer the service, but I've not had a reply from either of them.

 

So: does anyone here have a UK rental property for which they've been able to get a depreciation report done to ATO standards, for use in their Aussie tax return?

 

TIA

Tarby


ACS RPL submitted 13/03/09 ¦ RPL approved 2231-79 (Oracle) 12/05/09 ¦ 175 visa application lodged 21/05/09 ¦ IELTS 9-9-9-9 13/06/09 ¦ Case officer assigned 20/10/09 ¦ Medicals done 27/10/09 ¦ Police certs sent 10/11/09 ¦ Visa granted 24/11/09

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Found this and thought you might find it useful

 

http://www.hmrc.gov.uk/agents/toolkits/property-rental.pdf

 

PP

xx

 

PP this might be useful but the document you link to relates to the UK tax situation for rental properties but not the Australian Tax Office and it therefore wont bare any relevance to the question the OP has asked.

 

I think it's a great question and not one I have come across yet despite owning property management businesses in the UK and having a few buy-to-lets there myself.

 

My guess is there won't be a letting agency that will provide depreciation reports as it is unlikely the training required would be justified by the potential custom. There might be surveyors who offer this service though - I'll be interested what the OP manages to find out.

 

NWM

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Hi Tarby

 

This is outside my scope of advice, but assuming the location is not an issue, from personal experience there might be two issues:

 

Suitably qualified Quantity Surveyor - registered with ATO & living in the UK

 

Age of property - think it is early 80s for residential and likelihood your place is older

 

Alan Collett might be able to shed light on this strategy and the right people given his UK links.

 

I also found this link for you.

 

http://www.localsurveyorsdirect.co.uk/chartered-surveyors-building-surveys.aspx This throws up several people in the area.

 

Looking forward to seeing how this pans out, as must be many a PIA member in this situation.

 

Cheers


UK Financial Planner to British expats living in or going to Australia. Now offering FREE managing money webinars on (budgeting, pensions and retirement planning). Great if you're moving countries. Find out more at www.poppyredifa.co.uk or call us on 01260 430011.

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Did you get this problem sorted? I am now in the same situation.

 

No mate, no joy with that one unfortunately. It's not such a big deal for me though... my UK property is 50/50 with my wife and she doesn't work so I'm only getting clobbered on my half of the rental income, and we've only got about a year to go before the mortgage is paid and we'll sell up at that point. If we had longer left on the mortgage and the ATO were going to be hammering the rental income for a longer period then I might have pursued it further, but as it is, I just can't be bothered TBH. Anyway, I can still offset repairs, insurance, agent fees etc against the tax, so it's not a total disaster... it's just not as tax-efficient as it would be if I had those depreciation reports coming in.

 

Never mind... at least the exchange rate seems to be heading in the right direction for once!

 

Cheers,

Tarby


ACS RPL submitted 13/03/09 ¦ RPL approved 2231-79 (Oracle) 12/05/09 ¦ 175 visa application lodged 21/05/09 ¦ IELTS 9-9-9-9 13/06/09 ¦ Case officer assigned 20/10/09 ¦ Medicals done 27/10/09 ¦ Police certs sent 10/11/09 ¦ Visa granted 24/11/09

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http://lite.indicator.co.uk/tax/dz/download.php?docid=81679

 

Might be of interest ...

 

Best regards.


Managing Director, Go Matilda Visas - www.gomatilda.com

Registered Migration Agent Number 0102534; Registered Tax Agent (Australia)

Chartered Accountant (UK, and Australia)

T - 023 81 66 11 55 (UK) or 03 9935 2929 (Australia)

E - alan.collett@gomatilda.com

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I am sure you have a solution to this already but for the sake on anyone else who stumbles on this thread...

 

I am just in the process of getting a quote for my UK based property from http://www.washingtonbrown.com.au/property-depreciation-schedules/

I also notice that http://www.gmtax.com.au/2014/04/tax-deductions-in-australia-on-uk-rental-property-depreciation-as-a-tax-deduction/ does UK property so may go there for an alternative quote.

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I am sure you have a solution to this already but for the sake on anyone else who stumbles on this thread...

 

I am just in the process of getting a quote for my UK based property from http://www.washingtonbrown.com.au/property-depreciation-schedules/

I also notice that http://www.gmtax.com.au/2014/04/tax-deductions-in-australia-on-uk-rental-property-depreciation-as-a-tax-deduction/ does UK property so may go there for an alternative quote.

 

Hi - just wondering how you went in the end on this? Would be interested to hear what you ended up going with and costs/benefits as I am in a similar boat.

 

Cheers

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Hi jsc

I did end up with Washington Brown and their depreciation schedule does mean that we will be able to reduce our tax liability by more than the cost of the reports which they guarantee anyway. Pricing was really high at around double what you would pay for a domestic schedule at $1,400. Because we were having a few reports done for identical units we managed to negotiate a discount but nothing like what you would expect - still $1,100 for each unit. If you have time to hunt around you may be able to get a better deal.

Good luck

Cheers

Rob

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Hello all,

 

I can recommend someone I've used for the past 3 years and his name is Alvin Teo. The company is tax shield and he did a very comprehensive depreciation schedule for my rental property in the UK. It was really simple to arrange and very very cheap to do. Hope that is of help.

 

http://taxshield.com.au

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Hi jsc

I did end up with Washington Brown and their depreciation schedule does mean that we will be able to reduce our tax liability by more than the cost of the reports which they guarantee anyway. Pricing was really high at around double what you would pay for a domestic schedule at $1,400. Because we were having a few reports done for identical units we managed to negotiate a discount but nothing like what you would expect - still $1,100 for each unit. If you have time to hunt around you may be able to get a better deal.

Good luck

Cheers

Rob

 

Hi Rob - how much (or roughly what percentage) of the UK depreciation schedule costs were you able to claim back on Australian tax? i.e. would you say the benefit was worth the investment?

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Hi Rob - how much (or roughly what percentage) of the UK depreciation schedule costs were you able to claim back on Australian tax? i.e. would you say the benefit was worth the investment?

 

You can claim the actual cost of getting the depreciation schedule as an expense. Do you understand how depreciation schedules work? The schedule will tell you how much you can claim each year on your tax return. If your property is fairly new, it can make a huge difference to your tax liability. If it's older, less so.

 

For instance, I had a new property in Darwin and thanks to the depreciation, I not only paid no tax on the rent but also got a $5000 - $6000 refund on my PAYE tax every year.


Scot by birth, emigrated 1985 | Aussie husband applied UK spouse visa Jan 2015, granted March 2015, moved to UK May 2015 | Returned to Oz June 2016

"The stranger who comes home does not make himself at home but makes home itself strange." -- Rainer Maria Rilke

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Yes, the entirety of the cost of the depreciation report is tax deductible in Australia.

 

Remember that the report identifies the tax deduction over many years into the future - you incur the cost of the Quantity Surveyor once.

 

Also, if you haven't had a tax depreciation report prepared already and have held rental properties for a few years with income that is assessable in Australia you can seek an amendment to already lodged tax returns, thereby generating a tax repayment.

 

Best regards.


Managing Director, Go Matilda Visas - www.gomatilda.com

Registered Migration Agent Number 0102534; Registered Tax Agent (Australia)

Chartered Accountant (UK, and Australia)

T - 023 81 66 11 55 (UK) or 03 9935 2929 (Australia)

E - alan.collett@gomatilda.com

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Hi Alan

 

I did send you an email asking for more information about this as I still don't really understand how it can benefit me....

 

Cheers

 

Kirk

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Hi Kirk.

 

Having a tax depreciation report prepared should enable you to claim a tax deduction in Australia for depreciable items in a let property that you might otherwise not claim.

 

This will reduce your assessable income in Australia, which in turn will reduce your tax liability in Australia.

 

The cost of the firm preparing the report should also be a tax deduction in Australia.

 

Best regards.


Managing Director, Go Matilda Visas - www.gomatilda.com

Registered Migration Agent Number 0102534; Registered Tax Agent (Australia)

Chartered Accountant (UK, and Australia)

T - 023 81 66 11 55 (UK) or 03 9935 2929 (Australia)

E - alan.collett@gomatilda.com

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Hi Alan

 

I did send you an email asking for more information about this as I still don't really understand how it can benefit me....

Kirk

 

I'm not surprised because it's a slightly mad system IMO.

 

How it works is this.

 

When you start renting out the property, you get a valuer to assess the value of the property and its fixtures. As you know, over time structures deteriorate and one day you'll need to do repairs on the house - so you are allowed to claim an allowance for that deterioration (called depreciation) every year. On a new home it can be several thousand dollars. Even on an old home it's often worth doing.

 

Yes, I know you haven't actually spent a cent of that money, but it doesn't matter - you get to deduct the amount as an expense on your tax return, year after year.

Edited by Marisawright

Scot by birth, emigrated 1985 | Aussie husband applied UK spouse visa Jan 2015, granted March 2015, moved to UK May 2015 | Returned to Oz June 2016

"The stranger who comes home does not make himself at home but makes home itself strange." -- Rainer Maria Rilke

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Yes, the entirety of the cost of the depreciation report is tax deductible in Australia.

 

Remember that the report identifies the tax deduction over many years into the future - you incur the cost of the Quantity Surveyor once.

 

Also, if you haven't had a tax depreciation report prepared already and have held rental properties for a few years with income that is assessable in Australia you can seek an amendment to already lodged tax returns, thereby generating a tax repayment.

 

Best regards.

 

How do we get this done?

 

Is this something Go Matilda can do?

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How do we get this done?

 

Is this something Go Matilda can do?

 

 

Hi dmjg.

 

Sorry for the delay in replying. Just back from cold water swim camp in Tassie!

 

We (GM Tax) work closely with a firm of Quantity Surveyors that prepares these depreciation reports.

 

Feel able to send a PM to me.

 

Best regards.


Managing Director, Go Matilda Visas - www.gomatilda.com

Registered Migration Agent Number 0102534; Registered Tax Agent (Australia)

Chartered Accountant (UK, and Australia)

T - 023 81 66 11 55 (UK) or 03 9935 2929 (Australia)

E - alan.collett@gomatilda.com

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Hi dmjg.

 

Sorry for the delay in replying. Just back from cold water swim camp in Tassie!

 

We (GM Tax) work closely with a firm of Quantity Surveyors that prepares these depreciation reports.

 

Feel able to send a PM to me.

 

Best regards.

 

Hi Alan, can one claim the UK depreciation of 10% of gross rental income, and then on top of that claim Australian depreciation on the UK property as per a QS report?

 

Thanks

 

BB


MELBOURNE SHORT TERM ACCOMMODATION - FURNISHED SELF-CONTAINED STUDIO APARTMENT AVAILABLE -

walk to shops, beach and station. Ideal for new immigrants before you find a long-term rental. PM me for further details.

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Hi Alan, can one claim the UK depreciation of 10% of gross rental income, and then on top of that claim Australian depreciation on the UK property as per a QS report?

 

Thanks

 

BB

 

 

Hi BB.

 

I think you are referring to the 10% wear and tear allowance for UK furnished lettings.

 

This allowance is a UK tax deduction; it isn't available in Australia where you claim the depreciation deduction.

 

Best regards.


Managing Director, Go Matilda Visas - www.gomatilda.com

Registered Migration Agent Number 0102534; Registered Tax Agent (Australia)

Chartered Accountant (UK, and Australia)

T - 023 81 66 11 55 (UK) or 03 9935 2929 (Australia)

E - alan.collett@gomatilda.com

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So... I know that the depreciation of Australian property is limited to 40 years, after that you can only claim for the internal fixtures and fittings etc. Would this be the same for UK property since it is generally older anyway? I expect not sadly but worth asking. My house in the UK is a 1930's end of terrace house supplied with some fixtures like nice floor coverings, a range cooker and canopy, carpets etc etc.

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So... I know that the depreciation of Australian property is limited to 40 years, after that you can only claim for the internal fixtures and fittings etc. Would this be the same for UK property since it is generally older anyway? I expect not sadly but worth asking. My house in the UK is a 1930's end of terrace house supplied with some fixtures like nice floor coverings, a range cooker and canopy, carpets etc etc.

 

Yes, as UK property depreciated in Australia is treated the same as Australian property. But the fixtures and fittings often only depreciate over 10 years, not 40.

 

Anything newly purchased in that time can be claimed.

 

The depreciation company I use will not charge you if the first year's depreciation is less than their fee I believe. PM me your email address and I'll get you details sent.


MELBOURNE SHORT TERM ACCOMMODATION - FURNISHED SELF-CONTAINED STUDIO APARTMENT AVAILABLE -

walk to shops, beach and station. Ideal for new immigrants before you find a long-term rental. PM me for further details.

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So... I know that the depreciation of Australian property is limited to 40 years, after that you can only claim for the internal fixtures and fittings etc. Would this be the same for UK property .

 

It doesn't matter where the property is, if you're claiming depreciation as an Australian taxpayer then the Australian rules apply. You should still get a depreciation report even if the property is older, as you've probably done some internal renovations in that time and will be able to claim depreciation on the internals.

 

When the valuer does the report, they'll automatically include the depreciation for the main building as well, so you'll soon know whether there's anything to claim or not.


Scot by birth, emigrated 1985 | Aussie husband applied UK spouse visa Jan 2015, granted March 2015, moved to UK May 2015 | Returned to Oz June 2016

"The stranger who comes home does not make himself at home but makes home itself strange." -- Rainer Maria Rilke

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This is an old thread, and should perhaps be closed?


Managing Director, Go Matilda Visas - www.gomatilda.com

Registered Migration Agent Number 0102534; Registered Tax Agent (Australia)

Chartered Accountant (UK, and Australia)

T - 023 81 66 11 55 (UK) or 03 9935 2929 (Australia)

E - alan.collett@gomatilda.com

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