Many Australians choose to invest in apartments and unit developments as a part, or all of their property portfolio. These reasons can be many, but typically include:
There is a common myth that due to the typically smaller square metre size of many apartments, there is less value in having a Capital Allowance and Tax Depreciation Schedule prepared - but this is far from the truth.
Substantial tax deductions are still claimable on apartments and units, particularly new and recently built ones.
At Capital Claims, we have extensive experience assessing and reporting on the capital allowances and depreciation of apartments and units. The data presented below is based on years of experience completing thousands of depreciation schedules for owners of these properties all around Australia.
Brand new or second-hand, you can see from the table above that the extra cash available for claiming depreciation is well worth making the claims.
So given that apartments and units are typically smaller than houses, and therefore seemingly have a lower construction cost and fewer assets, how do they generate such substantial deductions?
The answer is in the common areas and the higher actual construction costs.
Depreciation is calculated on your rental property in two key ways. We calculate the depreciation of:
The great news for apartment owners, is that because they own a share of all the common areas of the apartment/unit development, they are also entitled to claim for a share of those construction costs and shared assets. This means claiming deductions for the depreciation of your share of the driveways, basements and carparks, hard landscaping, pools, gyms, security systems, fire extinguishers, BBQ areas, and any other shared buildings or facilities your complex has.
*Note - the ability to claim annual depreciation on included assets is no longer available to you if you purchased a second hand apartment (purchased after May 2017). However, the annual depreciation is still claimable as a capital gain offset when you sell the property (reduces any CGT).
The multi-level aspect to apartment/unit complexes means that the construction cost per square metre is typically higher than for a standard residential house.
As the depreciation of constructed works is based on the construction cost, a higher construction cost means higher deductions for depreciation each year.
To ensure you are maximising the depreciation deductions available to you for your apartment/unit, you should engage a quantity surveyor to complete a Capital Allowance and Tax Depreciation schedule for you.
A quantity surveyor will inspect your apartment and the complex, or rely on cost information provided by the developer to complete a Capital Allowance and Tax Depreciation Schedule.
A Capital Allowance and Tax Depreciation Schedule is a document that outlines the deductions that are claimable each year for the whole time you own the property (so you only need to buy it once). You provide this document to your accountant (or use it yourself for self reporting), and the deductions will be applied to your tax return each year.
Using a Capital Allowance and Tax Depreciation Schedule to reduce your tax payable, can greatly improve the cash return on your investment property.
It is really important to us that investors can be assured of a good return on investment when purchasing our depreciation schedules. For peace of mind, you are welcome to request a free estimate of the likely deductions claimable on your investment property, before you order a full depreciation schedule.
Our expert team will access information about your property online and provide you with a reliable estimate of deductions.
To request and estimate of deductions for your property, enter your details here, or contact our friendly team during business hours on 1300 922 220. As part of that process we will also provide quote to prepare a complete and accurate schedule for you.
As further assurance to our clients, we guarantee that your first full year of deductions will be at least twice the value of our fee, or we will not charge you for the schedule, you will receive it free!
You have nothing to lose, and potentially thousands of dollars to gain. Contact our team today - via our website, or on 1300 922 220.
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