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Most investment properties no longer require physical inspections

Analysis by quantity surveyors, Washington Brown, has found more than 82 per cent of investment properties do not require a physical inspection to achieve the maximum depreciation. 

The company assessed 15,370 individual investment properties in Sydney over the past year since the pandemic and found 12,698 – or 82.6 per cent – of properties did not require a physical inspection to achieve the maximum depreciation. 

Washington Brown CEO Tyron Hyde said in the old days every property had to be physically inspected so depreciation experts could value both the building and plant and equipment items, such as dishwashers and ovens, individually, but that was the way of the past. 

“The benefits of not having a physical depreciation inspection is that you will save both money and time,”
Mr Hyde said.

โ€œIf your property doesnโ€™t need a physical inspection for a depreciation schedule, the good news is that you will save up to $300. 

โ€œNot only will it be cheaper, but youโ€™ll also receive the report faster. It also means you can have a โ€˜contactlessโ€™ report, with no one coming into your property and bothering your tenants, which is a big benefit during COVID โ€“ particularly during a lockdown like we are experiencing now.โ€ 

Mr Hyde went on to explain law changes in 2017 were the “catalyst for change, with property investors now unable to claim depreciation on plant and equipment items that arenโ€™t brand new”.

โ€œNow, for second-hand properties, you can only claim depreciation on the structure of the building, such as concrete and bricks, unless you have renovated,” he said.

โ€œIf you buy brand new items like carpet and blinds, you can still claim depreciation but it must be based upon the purchase price rather than an estimate, so you can provide these figures to a depreciation expert, without an inspection being necessary. 

โ€œSince depreciation can only be claimed on the structure of the building for second-hand properties, itโ€™s very likely records already exist from previous depreciation inspections, and this is another reason why a physical inspection is likely not needed,” he said.

โ€œIn 40 years we have amassed an extensive database of construction costs for the majority of residential and commercial buildings around Australia.โ€ 

Mr Hyde said around 17.4 per cent of properties, such as luxury homes, still required an inspection but as a general rule, stock-standard apartments in a block of hundreds would not need to be inspected. 

โ€œAt Washington Brown, we analyse each property before recommending a course of action and determining what is best for each client, rather than saying every property has to have an inspection, which is what some quantity surveyors do,โ€ he said. 

โ€œIf an investor is being told every property must have an inspection, be aware thatโ€™s not the truth – the quantity surveyor will be acting in their own best interests, rather than yours. 

โ€œThe numbers donโ€™t lie. The facts show we donโ€™t need to physically inspect every property in order for the maximum tax deductions to be claimed. In fact, the truth is that the vast majority donโ€™t need a physical inspection.โ€ 

“The benefits of not having a physical depreciation inspection is that you will save both money and time,
Mr Hyde said.

โ€œIf your property doesnโ€™t need a physical inspection for a depreciation schedule, the good news is that you will save up to $300.”

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