Every year there are millions and millions of dollars in unclaimed tax deductions for depreciation. That might make the ATO happy, but as a savvy investor you should be making sure that you are not one of those contributing to these unclaimed tax dollars when they could be in your pocket.
Firstly let’s start by explaining what exactly is Depreciation?
It is – put simply – compensation for wear and tear. Buildings being rented out suffer wear and tear, so do the assets (fixtures & fittings, or chattels – including appliances, floor coverings, hot water system etc).
It is a tax deduction. Depending on the property, it can easily exceed $10,000 in a single year. Even older properties usually have something worth claiming. It is definitely worth finding out if a Depreciation Schedule is viable for your investment property.
It is treated by your accountant as just another tax deduction. Every year you probably claim on interest payments, council rates, water rates and property management fees as tax deductions against your investment property and depreciation should be another.
Secondly what is a Tax Depreciation Schedule?
Again, put simply – this is a document that sets out how much depreciation you can claim on your property every year from when it was first available to rent. People also use different terms for ‘Tax Depreciation Schedule’ like the shortened ‘Depreciation Schedule’ or a ‘Quantity Surveyor Report’ or a ‘Capital Allowances Schedule’…… or sometimes people just say, ‘my accountant said I need a building tax report thingy’. Title aside if you are an investor you should have a building report tax thingy for every investment property you own.
For Self Managed Super Funds the deadline for new entrant funds is the 28th of February – there is still time to get your schedule organised.
If you would like us to organise you a no obligation quote to have a depreciation schedule done on your rental property please either give Bianca a call on 0414 205 659 or email your details to email@example.com and we will send you some more info.