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Renovations, DIY and Repairs – Here’s The Tax Information You Need To Know As A Property Investor

As a property investor, you might find yourself implementing repairs and renovation work onto a property to ensure that you are maximising its value on the market. However, though both can be claimed on your tax return, it’s of paramount importance that you know how to claim them. Getting it wrong can be both costly, and unlawful.

A rental property improvement is a renovation where something is improved beyond its original state and must be claimed with depreciation. This means that you are claiming a deduction for the decline in the value over the effective life of the renovation. For example, a rental property improvement that could be claimable by a property investor could include a bathroom getting retiled.

Maintenance and repairs however can be claimed differently, with all records kept containing accurate information on that work. This will assist in working out the depreciation of assets of the property.

A depreciation schedule is a report that outlines all available tax depreciation deductions for a residential investment property or commercial building. These depreciations can be claimed in your tax return each financial year and could help you to save thousands.

Investors who renovate and lodge their tax returns prior to ensuring that they have updated their tax depreciation schedule correctly could get caught out in making a mistake between the two types of work. Those who fail to properly record rental property improvements in a tax depreciation schedule risk making inaccurate claims and inviting the scrutiny of the Australian Taxation Office (ATO).

Your tax obligations and entitlements when renovating your property may change depending on how you go about it. Depending on whether you are a personal property investor, engaged in the profit-making activity of property renovations or carrying on a business involved in renovating properties, you will have to abide by certain requirements outside of maintaining the depreciation schedule.

Personal Property Investor

As a personal property investor engaging in renovations to a property:

Profit-Making Activity of Property Renovations

Consider yourself a ‘flipper’ of properties? You will be required to:

In The Business Of Renovating Properties

If you are carrying out the business of renovating or flipping properties:

In this instance, CGT does not apply to assets held as trading stock. Similarly, the CGT concessions (such as the CGT discount, small business concessions and main residence exemption) will not be applicable to the income gained from the sale of the properties.

If you are concerned about any of the topics discussed above, or want to know more about claiming property improvements on your tax return, you can come and speak with us for further information and advice.

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Looking To Upscale Your Business? Here’s What You Need To Know…

Posted on August 15, 2022 by admin

It’s a wonderful feeling when you have reached a point where your business is so successful that you need to upscale. Whether hiring more people or moving location, upscaling has its unique challenges. What can you do to ensure that you are hitting the ground running while upscaling?

Set Realistic And Actionable Goals

Businesses should set realistic and actionable small goals which they can work towards, rather than broad goals which provide no direction. Setting broad and unrealistic goals is demotivating and makes any progress made seem insignificant. Every person in the business should be given a target to meet over a reasonable timeline, contributing to achieving a larger goal.

Establish Standardised And Automated Processes

Small businesses can make the mistake of ‘doing things as they come’, but this means that as the business grows, adjusting to high-scale tasks is difficult. To avoid this, businesses should standardise all processes of work. Any individual placed into a role should be able to follow standardised procedures and yield a product that is of similar quality to the previous one. Investing money into automation tools is worthwhile for this procedure. This can include automating social media management, email, and customer relationships. Both of these will contribute to creating structures that support growth.

Identify Competitive Strengths And Weaknesses

Recognising the strengths and weaknesses of one’s business is essential. Strengths will allow businesses to hone in on their unique qualities, giving them a competitive advantage. Weaknesses will reveal which areas require growth so that changes can be made before upscaling takes place.

Network

Businesses should continue to develop relationships with service providers, sales channel partners, suppliers and customers. Keeping an open mind about partnerships or potential collaborations could open up different avenues of business growth.

Anticipate The Adjustment Pace.

No matter how prepared you feel, any change in an organisation will require a period of adjustment for the rest of your team. Give them time to recognise the need for change and accept this opportunity’s challenges. More importantly, they need time to understand their roles in the bigger picture of your organisation’s plans to scale and determine how they can make the most of their skill sets and add value to the company. Make sure to consider adjustment protocols and allocate a reasonable period for such adjustments in your scaling plans and process.

Outsourcing The Non-Essentials

As the business increases in stature, there will be a lot more little and frustrating tasks, meaning that you can’t focus on what’s important. Outsourcing components like payroll or marketing to companies with the professionals to do it effectively means that you can focus on upscaling the business.

Upscaling can be very stressful, but whether it’s making changes to your business’s technology or outsourcing things in the short term, to upscale a business means focusing on what is best for your business.

To get to this point, you’ve made a success of it, so it’s important not to lose your identity in the process. Upscaling your business is taking what’s great about your current operation and building it outwards.

If you are looking towards how your business can take itself to the next level, business planning for any eventualities can be of benefit. Consulting with a trusted adviser can be of great help when moving forward in your business’s upscaling endeavour.

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