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.
The table below demonstrates the actions required to maximise and maintain the compliance of claiming tax deductions for depreciation of disaster-stricken properties.
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.
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.
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 firstname.lastname@example.org.
Mark is an expert quantity surveyor, business owner, public speaker and property developer. With 20+ years experience in the construction and quantity surveying industry Mark’s specialist expertise have been sought in consultant capacity by professional bodies such as the National Institute of Accountants and the National Tax and Accountants Association, and he has presented at various property and tax seminars and expos nationwide. Mark holds a Bachelor of Construction Management from the University of Newcastle, is an affiliate member of the Australian Institute of Quantity Surveyors and a Registered Tax Agent.View all posts by Mark Wilkins