Every year, thousands of investment properties are affected by events such as natural disasters (e.g. fire, flood, cyclone) and other unforeseen circumstances. In these situations, property investors often find themselves in the stressful situation of having to replace many assets and sometimes rebuild part or all of their properties.

While this process can be challenging for both owner and tenant, the property is ultimately improved by any work done and the new construction or assets all generate higher tax depreciation deductions.

Further considerations when assessing the impact of the disaster

The table below demonstrates the actions required to maximise and maintain the compliance of claiming tax deductions for depreciation of disaster-stricken properties.

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Repaired: Minor works required to return the asset to its original condition, not an improvement upon the appearance or functionality of the asset in its original state.

Replaced: An asset or building works of the same function and specification have taken the place of the original asset.

Improved or Upgraded: The damaged asset/s and or building works have been replaced and improved beyond their original function and specifications.

How to claim your tax depreciation deductions

If a quantity surveyor has previously assessed the property in question, adjustments to the original tax depreciation schedule figures can be applied at a minimal cost. However, if the property has not been previously assessed, a full inspection and tax depreciation schedule is required from a quantity surveyor.

Get specialist advice

Timing is critical in this situation and it is best addressed as soon as practical. We recommend discussing individual scenarios with our experts to ensure any previous, current and future depreciation claims are maximised and maintained in accordance with ATO guidelines.

If your rental property has been affected by natural disaster and you would like to discuss the implications of this in terms of claiming your depreciation, don't hesitate to contact our team on 1300 922 220 or get in contact with Alex our Senior Tax Depreciation Specialist at alexk@capitalclaims.com.au.

click to estimate tax depreciation deductions for rental property

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