If you own an investment property but haven’t got a depreciation schedule, you could be missing out on claiming thousands of dollars on your tax return.
Everyone knows buying property is a good investment because a house has the potential to be worth more than what you paid for it, longer term. But did you know while the property itself is gaining value, the actual building and its contents are depreciating. This wear and tear on your investment could actually be earning you money.
Seasoned property investors know this, but many others are none the wiser resulting in thousands of dollars going unclaimed every year. “Research shows that 80% of property investors are failing to take advantage of property depreciation” says Mark Chapman, H&R Block’s Director of Tax Communications, “because they have not obtained a professionally produced depreciation schedule.”
Let us explain.
Since the value of your building depreciates every year, you can claim for the depreciation from the Australian Tax Office. But in order to get those savings, you first need a depreciation schedule from a quantity surveyor.
What is a depreciation schedule?
It’s a document that includes details of your building and forecasts how certain parts such as fixtures, fittings and common areas will reduce in value over time. It essentially outlines the exact amount of tax deductions for depreciation that you’re entitled to claim.
The Depreciation Schedule is broken down into three main categories – Capital Works, Plant and Equipment, and Capital Improvements.
Capital Works or Building Allowance
This refers to anything that is structural and attached to the building. Things like the kitchen cabinets, windows, doors, locks, sinks, bath, or swimming pool. These usually make up around 90% of your total claim.
Plant and Equipment
This refers to items that can be removed from the building. It includes things like carpet, blinds, air conditioners, hot water systems, smoke alarms and ceiling fans.
This refers to any renovations or improvements made to a property and comprise of Plant and Equipment items and Building Allowance items.
All of the above items will have their own rate of depreciation, which is documented for you in the Depreciation Schedule.
Our Rapid Building Inspections team have teamed up with SJB Quantity Surveyors to make depreciation scheduling easier than ever. Together we can complete a schedule in about half an hour so you can provide it to your accountant as quickly possible. Your accountant will then use the Depreciation Schedule to start claiming tax back for you.
Our schedules can be back dated 40 years, so you can even claim from years you’ve missed and they’re fully tax deductible. In the first year that you claim depreciation on your investment property from the Australian Tax Office, we believe your claim will be at least twice the amount of the cost that you pay to us for the preparation of the Depreciation Schedule. If not, we’ll give your money back *.
Be prepared for tax time and book in a depreciation schedule inspection today by calling one of our friendly team members on 1300 407 341.
* Applies to the first full financial year. Offer not valid for second-hand properties purchased after 09/05/2017. Money back is limited to cost paid for the preparation of the Depreciation Schedule.
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If you still have any questions, feel free to contact us, and we’d be more than happy to answer any questions you may have.