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Investors Must Get A Tax Deprecation Schedule!

By Emma Smith

One of the most costly mistakes a property investor can make is not getting a “depreciation schedule” done by a registered quantity surveyor… it could cost you thousands of dollars each year.

As a building gets older and items within it wear out, they depreciate in value. The ATO allows property investors to claim a rental & investment property depreciation deduction. This is related to the building, plant and equipment items contained within it. It can be claimed by any owner of an income producing property. This deduction essentially reduces the owner’s taxable income – they pay less tax!

When a quantity surveyor completes an investor’s capital allowance and tax depreciation claim, two main elements are taken into consideration;

  • Capital Works Allowance (to do with construction costs of the building)
  • Plant and Equipment (removable assets such as curtains and hot water services)

The ATO requires that registered quantity surveyors conduct an inspection and compile a report. Your accountant is not allowed or qualified to do this, however, accountants love it when they are presented with such a report as it helps them claim the most on your behalf. And lets face it, who wants to pay more tax than they have to? If you have an investment property managed by an agent they should have advised you of this and provided you with a recommendation of who to use. We use and recommend BMT Quantity Surveyors – they are a national company and can be contacted on 1300 728 726. These reports usually cost between $600-$700 (tax deductable) and I know BMT’s report is compiled for up to a 40 year period. You can also go back 2 years in retrospect if you have owned the property for a few years and have not had a depreciation schedule done as yet. It doesn’t matter whether your property is new or old there is usually depreciation benefits you can claim – most companies will not do the report if they cannot get you a deduction of twice their fee in the first year.

For more information regarding this or any residential investment matter, or for a copy of our free “Information for Investors”  booklet please contact me anytime on 5251 5880 or the form below

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