A Tax Depreciation Schedule (also known as a Capital Allowance and Tax Depreciation Schedule or Quantity Surveyors Report, or Rental Property Depreciation Report) is a document, typically prepared by a professional Quantity Surveyor, that clearly reports in detail the deductions available to an investor for the depreciation of their investment property. Click here if you would like to read more about what depreciation is.
What does a Tax Depreciation Schedule include?
Not all depreciation schedules are the same, and quality providers will have more report inclusions and details to assist you and your accountant to apply the most effective methods of depreciation for your circumstances.
A Capital Claims Tax Depreciation Schedule has all of the inclusions that help you to maximise your deductions such as:
- Individually itemised asset values;
- Identification and seperation of staged capital works and improvements;
- 40 years of forecasted deductions;
- Reporting of both diminishing value and prime-cost methods of depreciation, as well as graphing of the results for easy comparison;
- Pooling of low-cost and low-value assets to speed up depreciation claims in the earlier years;
- Inclusion of immediate write-off assets;
- Scrapping/disposal of assets where applicable.
If you are looking to purchase a Depreciation Schedule for your rental property, read on below about how to select a Quantity Surveyor for your depreciation schedule.
Why do I need a Tax Depreciation Schedule?
A tax depreciation schedule will outline the deductions claimable for your Division 40 (Plant and Equipment) and Division 43 (Building Write-Off) claims when completing your tax return. It is important that these deductions are correctly assessed and estimated to ensure ATO compliance in case of an audit. Some accountants say they can calculate these deductions for you, but accountants are not recognised by the ATO as qualified to estimate construction costs and asset values. It is important that a recognised professional completes your depreciation schedule for you.
Where do I get a Tax Depreciation Schedule?
Quantity Surveyors are one of the few professions recognised by the ATO to estimate historical and current construction costs, as well value the included assets. To purchase a Tax Depreciation Schedule simply contact a Quantity Surveyor for a quote. Once you select your provider a Tax Depreciation Schedule can usually be purchased quite simply over the phone or online. Good Quantity Surveyors like Capital Claims will assess your property online first to ensure value for you, undertake all the necessary property searches, arrange the inspection via your property manager and tenant and complete a thorough inspection. Inspections may not be necessary for brand new buildings where plans and inclusions are provided.
What do I do with a Tax Depreciation Schedule?
Once you have received your Tax Depreciation Schedule simply email it to your accountant, or take it along to your appointment so that they can include the calculated figures in your tax return. At Capital Claims we can can email the schedule directly to your accountant if that is helpful for you. Alternatively, if you are completing your tax return yourself, you can use the figures included to enter the correct amounts into the rental property section of the ATO tool. If you are unsure how to apply the results yourself you can contact us at Capital Claims, or the ATO for further guidance.
How much does a Tax Depreciation Schedule Cost?
Costs for depreciation schedules within the industry vary, with cheap reports starting for a few hundred dollars. Quality Depreciation Schedules that include inspections, incorporate works completed by previous owners, plus renovations you have completed, scrapping where necessary, can cost up to $770.00 and beyond if you are purchasing from BMT Tax Depreciation. A Capital Claims Tax Depreciation Schedule costs from $440.00 for brand new homes that are not inspected, up to $715.00 for more complicated reports. Our reports include everything a BMT report does, just for a better price. Check in with our team to see if we have a discounted arrangement in place with your accountant or property manager and you will save some further dollars. Regardless of who you purchase from, we think it is important to keep value in mind. The fee is 100% tax deductible and paying a couple of hundred dollars extra to avoid the budget reports and purchase a good one will likely mean thousands of dollars in additional cash flow to you over the life of the report.
How to ensure you are purchasing the best Tax Depreciation Schedule for your rental property:
- Ensure your Quantity Surveyor is a registered Tax Agent – registered with the Tax Practitioners Board of Australia;
- Use a specialist provider – calculating and reporting Capital Allowances and Tax Depreciation is not a core business for many Quantity Surveyors. A specialist will be up-to-date with the most relevant legislation and have the most experience in interpreting legislation and tax rulings to maximise the claims for your particular scenario;
- Ensure your report includes the following:
- Deductions reported and forecasted for the full effective life of the property (40 years);
- Both Division 43 and Division 40 assets inspected (where required), assessed and reported;
- Deductions calculated and reported using both Diminishing Value and Prime-Cost methods – so you can apply the most appropriate method to your scenario;
- Calculations and reporting for scrapping/disposal of assets;
- Pooling of low-cost and low-value assets each year.
- Your chosen provider should also complete a fee desktop assessment to provide a personalised estimate of deductions, undertake all necessary property searches, arrange the property inspection and liaise with you or your accountant to discuss the report if required.
It is a great idea to request a sample report and ensure your report is easy to read and understand – or your accountant may have to re-work the results at your cost!
A Capital Claims Tax Depreciation Report meets all of the above. With a free desk-top feasibility assessment of your property first, you can feel assured of a reliable assessment up-front to ensure that our report will be worthwhile and valuable to you.
Accountants love our depreciation schedules
Capital Claims' knowledge and applied experience has assisted many of our clients improve their after tax position. Whilst we have found the Capital Claims team to have a detailed approach to preparing depreciation reports; we have also found their ability to look at the whole picture allows us to assist our clients with their property portfolios and wealth creation. - Paul Siderovski, SiDCOR
As an Accountant I found Capital Claims professional, priced well and very efficient. Their depreciation reports are first class. My clients are also happy with the service and reports. - Michael O’Hehir RSM Bird Cameron
To find out what deductions you might be entitled to for depreciating your investment property click here.