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Tax depreciation helps investment property owners claim more

By Emma Smith

As a building gets older and items within it wear out, they depreciate in value. The Australian Tax Office (ATO) governs legislation that allows owners of income producing property to claim a tax deduction for this wear and tear. Capital works deductions can be claimed on the building’s structure and items considered permanently fixed to the property, while depreciation can be claimed on the plant and equipment assets contained within it.

Depreciation for income producing properties defined by the ATO is claimable under two major components: Capital works deductions (division 43) and Plant and equipment depreciation (division 40).

The Australian Tax Office (ATO) recognises Quantity Surveyors as one of only a few professions which possess the required construction costing skills to calculate the cost of items for the purposes of depreciation. A Quantity Surveyor is a qualified professional who specialises in building measurement and estimating the value of construction costs. They are able to apply their expertise during various stages of construction to ascertain the cost of building works on any residential or commercial property.

Claiming depreciation and the associated capital works deductions is a significant taxation benefit, and one which many investment property owners are unaware of. Depreciation is a non-cash deduction meaning you do not need to spend any money to claim it.

BMT are registered Quantity Surveyors and will work with your accountant to ensure you get the most out of your investment.

For more information, click here

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