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How do you know the depreciation values of a property and how to calculate the costs of the likes of repainting or having new carpet installed?

Guidelines for calculating the depreciation of a property are provided by the Australian Tax Office and released each year. It provides guidelines for the years or the life expectancy of each element of a home.

This goes back to the requirement to have a depreciation schedule for a property so that you have benefits when you’re processing your tax each year. It also helps property managers when managing or ending a tenancy.

When there’s been damage, for example a chip in a stone bench top and the property is five years old we can use the guidelines to see what the ATO determines is the life expectancy of that stone bench top.

Our Metro Property Management team is trained to look at the original cost of the bench top and estimate the damaged area. If it cost $2000 and it was 10 per cent of the bench area, that combined with the life expectancy ratio would determine the amount that could be depreciated.

Some owners have unrealistic expectations that you can have a full stone bench top replaced because there’s a chip or stain. This often happens when an owner is self-managing a property and has not had experience with negotiating bond returns.

This might also occur if they’ve used an agent who is not properly educated or haven’t taken the time to educate their owners. In those situations, it generally ends in disappointment, with disgruntled, unhappy owners and a poor outcome.

Disputes between renters and owners can end up in VCAT, despite the advice of a property manager, and the owner is potentially not awarded anything.

Sometimes it’s better to negotiate with your renters. By knowing values and ATO guidelines, a good property manager can try and negotiate a bond dispute before it goes to the tribunal.

We manage more than 1400 homes in 260 suburbs in Victoria. Talk to Metro PM today to see how we can help you to manage your property and help set your investment up for the future.