Tax depreciation can sometimes be overlooked when you’re a property investor. But
if your property is eligible, arranging a schedule or estimate before 30 June can help
you to maximise your potential tax returns.
A tax depreciation schedule can be organised through a quantity surveyor who will
inspect your rental property and report back on the assets that can be depreciated.
This report accounts for the decline in value of any plant and equipment assets,
extensions and renovations, as well as the structural building itself.
What is tax depreciation?
During the life cycle of a residential property, the building and equipment contained
within will age with wear and tear, and as a result, the value will depreciate over
time. “The Australian Taxation Office permits owners of investment properties to
submit claims against the depreciation of the residential building as well as certain
fixtures and fittings included within the property,” explains Jaime Pratt, Head of PM
at VPM.
The best time to arrange your tax depreciation schedule
As we head toward the end of the financial year, now is the perfect time to have your
tax depreciation schedule arranged. “This will ensure that you can claim the cost of
the schedule with this year’s tax return in addition to the potential depreciable
building, plant and equipment claims that can be made at tax time on your
investment property.”
How to get started with a tax depreciation schedule
Jaime suggests speaking with your accountant, who may have recommendations of
organisations that have qualified quantity surveyors to carry out a depreciation
schedule. “Alternatively, your Property Manager can often recommend a reputable
company,” she says. “They can also coordinate a suitable time with the tenants for
an inspection of the property and can carry out any requirements to complete the
report on your behalf.”
You’ll then receive a report detailing the potential deductions that can be claimed on
the depreciable assets of your investment property, which can be provided to your
accountant to assist when lodging your return this financial year.
Jaime advises that there are certainly advantages to investigating whether your
property qualifies for depreciable deductions. “A simple conversation with your
accountant or property manager may be the first step to making sure you don’t miss
out on any potential savings, helping you to maximise the returns on your property
investment.”
If you haven’t considered getting a depreciation schedule for your property
investment and would like some guidance on where to start, contact our experienced
team at VPM, who can help point you in the right direction before the end of the
financial year.
* Please note: This content is for informational purposes only and does not
constitute financial advice.
