If I said to you, we may be able to reduce your tax by thousands would you say no thank you!? Or would you say YES PLEASE…

There are many reasons why depreciation is important to property investors:

  • It helps improve cash flow to the property investor
  • It can reduce the tax payable
  • A negatively geared house loss can be reduced
  • A brand-new property can become affordable
  • Annual deductions are typically thousands of dollars for the residential property investor;
  • Commercial property owners and leasees are often both able to claim and benefit;
  • Annual deductions for commercial properties can often run into the hundreds-of-thousands of dollars.

Why do I need to claim the tax depreciation deduction?

Most investors would agree with me that “you need to maximise your cash flow”. One of the ways to do this is by claiming all-of the available tax deductions to you. The tax depreciation deduction along with the other available tax deductions will help reduce your tax payable and has the ability to put more money back in your pocket.

Many investors know that they can claim tax deductions for interest, property management fees, repairs and maintenance. But, many investors, also miss out on claiming the tax depreciation deduction. Maybe they didn’t know about it, they were confused as to their eligibility for it, or worst of all, they were told they couldn’t claim it by their accountant.

With interest rates being so low, the tax depreciation deduction could potentially be the biggest deduction claimable for some property investors.

Would you want to leave $1,000 in tax depreciation deductions unclaimable? What about $10,000? What about $100,000?

"The benefits of a tax depreciation schedule are far reaching.  Depreciation deductions can significantly reduce your taxable income and help your property return a positive cash flow sooner." - Michael Yardney,  Michael Yardney's propertyupdate.com.au

Claiming tax depreciation can make property investing affordable

A properties Tax Depreciation Schedule is calculated and projected or forecasted over 40 financial years. Each year’s claim is composed of the amount you can claim for Division 43 (the structural part of the property) and Division 40 (brand-new assets or plant and equipment items only).

Below are four? different scenarios we have worked on showing the tax depreciation claims achieved over the first full financial year, the first 5 financial years and over 40 financial years.

Brand-new property – 4 bedroom house, 2 bathrooms, 2 carparks, purchase price $597,200:

tax depreciation claimable for brand new property

Older property – 4 bedroom house, 2 bathroom, renovated kitchen, bathroom, verandah, purchase price $715,000: older property tax depreciation claims

Owner of a commercial property - A brand-new warehouse with office space:

brand new warehouse with office space tax depreciation claims

Leasee of a commercial property - Chemist with small doctors’ surgery attached: chemist and small doctors surgery tax deprceciation claims

 

How do I claim my tax depreciation deduction?

The quickest and easiest way to claim these deductions is to organise a tax depreciation schedule from a quality quantity surveyor. They will prepare a Tax Depreciation Schedule for your accountant to apply. Please note that your accountant is not qualified by the ATO to estimate construction costs to generate this deduction for you. Read further here:

 

Do all property investors need a tax depreciation schedule?

In order to maximise your all your Capital Allowance and Tax Depreciation deductions, you should investigate getting a tax depreciation schedule. Owners of qualifying residential property’s, commercial property’s or, leasee’s of commercial property’s who would like to claim one of their biggest tax deductions, need to order a tax depreciation schedule.

 

How do I know if my investment property qualifies?

One of our expert team members will complete a free personalised estimate of approximate tax depreciation deductions available to you. Our guarantee is that we do not complete or charge for a tax depreciation schedule if it isn’t worthwhile for the client.

 

Do I need to pay for my tax depreciation schedule every year?

No. A schedule is a one-time investment that is also fully tax deductible in the year you purchase it. Free updates can also be made where you have replaced, added or upgraded assets or you have done minor improvements and have the costs and details available. If you have completed major works and estimating is required, then there may be a fee involved.

Don’t be a property investor that didn’t claim one of their biggest tax deductions. Order a tax depreciation schedule from a quality quantity surveyor. We would be happy to help you, call us on 1300 922 220 or email Alex at alexk@capitalclaims.com.au. Alex will be happy to give you a free personalised quote for your residential or commercial property.

Related articles:

What investment property tax deductions can I claim on my rental property this financial year?

Landlords are boosting their tax returns by thousands with this single deduction

Can I back-claim for depreciation on my rental property?

            6 facts about tax depreciation plus 2 bonus downloads

About Mark Wilkins

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

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