Are You Getting the Most Return on Your Investment Property at Tax Time?

A simple report called a Tax Depreciation Schedule could save you thousands of dollars at tax time. However, 80% of property investors don’t claim it!

“Regardless of the age of your property, it will contain some items on which you can claim depreciation. This is a legitimate way to decrease the tax you pay on the income from your investment property, thereby increasing your cash flow and saving you money.”

What is Tax Depreciation?

Over time your property and the plant and equipment within it wear out. The Australian Tax Office (ATO) allows you to claim depreciation on these items every year for theeffective life of each item (up to 40 years). Although depreciation is not an actual cash expense, it represents a future cost. The ATO allows this tax deduction to assist you with the future replacement cost of the item.

How do you claim Depreciation Deductions?

A qualified Quantity Surveyor can prepare a simple report called a Tax Depreciation Schedule for your property, which will include all the items in your property that are decreasing in value.

Your accountant will use it when preparing your tax return to ensure you receive the maximum tax deductible depreciation you are entitled to.

You can claim Depreciation for:

  1. Assets that depreciate in value over a number of years. This includes “plant and equipment” such as furniture, carpets, curtains, ovens, dishwashers, air conditioning systems, hot water systems, washing machines and dryers
  2. Capital works deductions.

    This includes the building itself, extensions, alterations and structural improvements to your property. You can claim capital works deductions on:

    • A building where original construction started on or after 18 July 1985
    • Structural improvements to a property which started on or after 27 Feb 1992

Depreciation Facts:

  • The ATO identifies more than 1500 items as depreciable assets!
  • A Tax Depreciation Schedule costs around $700-$800 – this fee is 100% tax deductible
  • Two previous year’s tax returns can usually be adjusted to recoup lost claims, if you haven’t previously made a depreciation claim
  • Many companies offer a guarantee that they won’t charge if they can’t find double their fee worth of deductions

So contact a quantity surveyor to find out how much you could save in tax depreciation, and become one of the 20% of property investors who are enjoying more cash back from the ATO!

 

 

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