Depreciation Schedules on Investment Properties

DID YOU KNOW… Only around 20% of Investors have a tax depreciation schedule done on their investment property, which means the remaining 80% are missing out on substantial ATO Tax Depreciation benefits.

Some frequently asked questions about Depreciation Schedules…

  1. So how does a depreciation schedule help me?

Simple. A depreciation schedule will help you pay less tax. The amount the depreciation schedule says you claim effectively reduces your taxable income.

  1. Is my property too old to claim depreciation?

The simple answer is NO. If your residential property was built after July 1985 you will be able to claim both Building Allowance and Plant and Equipment. If construction on your property commenced prior to this date, you can only claim depreciation on Plant and Equipment. But it will still be worthwhile.

  1. Shouldn’t my accountant prepare this report?

If your residential property was built after 1985 your accountant is not allowed to estimate the construction costs. Tax Ruling 97/25 issue by the Australian Taxation Office (ATO) has identified that only a fully qualified quantity surveyor brings the appropriate education, experience and training to provide reliable figures upon which to base a property tax depreciation schedule.

  1. Will you need to inspect my property?

The Australian Institute of Quantity Surveyors (AIQS) Code of Practice stipulates that site inspections are necessary to satisfy ATO requirements.  A trained Quantity Surveyor will ensure all depreciable items are noted and photographed. This guarantees you won’t miss out on any deductions. The documentation can then be used as evidence in the event of an audit.

  1. My property is renovated. Can I still claim?

Yes. You will need to report how much you spent on renovations. This is an ATO obligation. If the previous owner completed the renovations you are STILL entitled to claim depreciation. In either case, where the cost of renovation is unknown, a Quantity Surveyor has been identified by the ATO as appropriately qualified to make that estimation.

  1. How much will my depreciation schedule cost?

John Willats from Homesure charges a one-off fee of $550 (GST inclusive) which is fully deductible and reports display 10 years of claim.

  1. I bought my property 3 years ago. Can I still make a claim?

Yes you can. Your accountant can amend your previous tax returns up to two years back. There are some exceptions, so contact your tax agent or the ATO for clarification.

**Information supplied by Realestate.com.au