Tax Depreciation Schedules Benefit Investment Property Owners

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Tax Depreciation Schedules Benefit Investment Property Owners

The end of the financial year is fast approaching.

If you own a residential or commercial investment property, it’s time to think about the benefits of a tax depreciation schedule.

A tax depreciation schedule – also called a quantity surveyor’s report -reduces your taxable income, maximising your tax return. The cost of a tax depreciation schedule itself can be claimed as a tax deduction.

Depreciation is one of the most significant deductions you can access as a property owner.

What is depreciation?

Over time, your property and its fixtures and fittings decline (depreciate) in value. Note that this is not the same as the overall value of your property (the building and land value) which generally rises in value over time.

Depreciation falls into two categories – Plant and Equipment (such as fittings and fixtures including carpet, curtains, dishwashers) – for properties built before 1985 -and Building Allowance – the construction costs of the building or buildings.

The ATO allows property investors to claim this decline in value as a tax deduction.

The amount of depreciation available in your investment property depends on the age of the property, its location, size, method of construction and the quantity of internal fixtures and fittings.

If you own an existing property, the balance of the forty-year period is claimable on an existing property.

Who can prepare a depreciation schedule?

For residential properties built after 1985, only a qualified quantity surveyor can prepare a tax depreciation schedule to an ATO-approved standard.  Your regular accountant does not have the right training or knowledge to complete this kind of report.

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When do I get one done?

Ideally, you should get a tax depreciation schedule organised as soon as you can for a new property, to maximise the allowable depreciation period of 40 years.

For newly-built properties, you should have one prepared as close to your settlement date as possible, ready to submit as part of your next tax return. A tax depreciation schedule can also be prepared for off-the-plan properties.

For older properties, we advise getting one done as soon as you can to maximise the remaining allowable 40 year period.

Many property owners don’t realise that they can claim depreciation on renovation works over $30,000 in value.

If you have already invested in a schedule and have renovated your property over $30,000 in value, you will need to obtain another schedule in order to reflect the changes brought about by a renovation.

What happens when I book a tax depreciation schedule?

When you book a tax depreciation schedule with The Home Inspection Hub, our process is simple:

  • We contact you to gather some initial information about your property. For new builds, a schedule can be prepared from your property plans, contract of sale and list of inclusions. As no inspection is required, this is a quicker and more cost-effective option.
  • For existing properties, we will arrange a time for an inspection with you or your chosen representative. After the inspection, a schedule is then prepared.
  • Our inspection and report process is carried out by a qualified quantity surveyor who specialises in tax depreciation schedules.
  • The report we prepare for you is easy to read and contains all of the information your accountant may require.

Get in touch and we will take you through the process and answer any questions you may have.

Call us on 1300 071 283 or ask for a free quote  on a tax depreciation schedule or any of our other residential building inspections.