When it comes to investment properties, it’s all about maximising your return and making the most of your investment. With tax time fast approaching, one of the best ways investors can maximise any tax-related benefits is with a tax depreciation schedule.
Over time – bricks and mortar, fixtures and fittings gradually deteriorate. The inevitable process of wear and tear eventually lessens the value of an asset and is referred to as depreciation.
A tax depreciation schedule details all the wear and tear from your residential or commercial investment property and calculates the amount you can claim as a deduction against your taxable income. Not only does a tax depreciation schedule reduce your taxable income, but the cost of completing it is also tax deductible – it’s a win-win for investors.
Think about it this way – a tax depreciation schedule essentially gives investment property owners a way to claim compensation for the wear and tear of their tenanted properties.
When depreciation is calculated, it’s broken down into two different categories. Firstly, there are capital allowances, or ‘bricks and mortar’, which relate to structural elements like a garage, carport, pergola, shed, paving, fencing, pool, clotheslines, and more. The second category is plant and equipment which includes the likes of carpet, dishwashers, heating and cooling systems, appliances, smoke alarms, window furnishings and more. Given their nature, plant and equipment items tend to wear out faster.
Generally speaking, investors can claim capital works depreciation over a period of 40 years. However, buildings and properties over 40 years old can still claim certain plant and equipment deductions. The conditions are set by the ATO and vary, depending on the property, it’s age and circumstances. It’s always best to get expert advice to make sure you stay on top of the opportunity.
Tax depreciation schedules need to be completed by a qualified quantity surveyor and for a good reason. Calculating the right amount of wear of tear is a skill which requires a combination of construction knowledge and an in-depth understanding of how tax depreciation works. A specialist quantity surveyor will understand construction costs much better than an accountant. While an accountant can advise on other areas of depreciation, a quantity surveyor understands the nitty-gritty details of property as an asset.
In our experience, good advice starts before purchasing an investment property. Our team of independent property experts can help you navigate the complex property landscape to help you better manage risk and maximise your return on investment. Our property advisory service will work with you to help you make smarter investment decisions before, during and after purchase.
To find out more about what you can and can’t claim, and maximise your return on investment, contact WBP Group today and boost your tax savings with a tax depreciation schedule.
Start with 3 easy steps.
Start with 3 easy steps.
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