Not sure what a rental depreciation schedule is? Get excited... depreciation is typically one of the largest tax deductions a property investor in Australia can claim each year, and a depreciation schedule helps to ensure you are maximising those tax deductions.
A rental property depreciation schedule is a report that clearly calculates and details the tax deductions a property investor can claim for the annual depreciation of their investment property (building and assets, not land).
Across the investment property community, a depreciation schedule can also be known as:
Read on below for more details...
Rental property depreciation schedules assist investors to claim the maximum tax deductions available for the annual depreciation of their investment property (referred to as capital allowance and depreciation by the ATO). Annual deductions are typically in the thousands of dollars every year, for up to 40 years.
Specifically, a property depreciation schedule will:
Quality investment property depreciation schedules will include all construction costs and assets, including previous renovations (whether completed by yourself or a past owner), as well as claim more aggressively for low cost and low value assets. There is a big difference between the standard inclusions of a cheap depreciation schedule and a more expensive one.
A Capital Claims Tax Depreciation Schedule has all of the inclusions that help you to maximise your deductions such as:
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 depreciation schedule simply contact a quantity surveyor for a quote.
Once you select your provider, a rental depreciation schedule can usually be purchased quite simply over the phone or online. Good quantity surveyors like Capital Claims Tax Depreciation 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.
You deliver your depreciation schedule to your accountant and they will apply the results in your tax return for that year, and for all the years going forward. If you do not use an accountant, you can apply the results yourself when completing your tax return. Keep in mind that once you select a depreciation method from the report (Prime Cost or Diminishing Value) you must stick with that method for all future tax returns.
Whilst there can be a substantial difference between the quality and results of a cheap depreciation schedule and a more expensive one, thankfully the difference in cost is minimal, especially when you consider the cost is 100% tax deductible.
A cheap report can cost a few hundred dollars, but will likely require you to inspect the property and provide a lot of information yourself. This can be very inconvenient and expensive for many people, not to mention that most people are not sure what to look for. These schedules are not likely to factor previous renovations and improvements or apply low cost and low value pooling for better results.
More expense reports are only a few hundred dollars more (up to $800 with some providers). These schedules are far more convenient, and will generate a far better result for the investor. A few hundred dollars extra up front can mean tens of thousands of dollars more deductions in the future.
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 Schedule meets all of the above and more! We also offer:
We believe we represent the best quality and best value rental depreciation reports in the industry across Australia.
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.
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