BMT & Assoc Quantity Surveyors

Tax Depreciation

L.J. Hooker recommends our preferred supplier BMT & ASSOC for the supply of Tax Depreciation Schedules. We hope that you can benefit from the tax advantage of owning an investment property.

BMT & ASSOC are specialists in the field of property tax depreciation. When BMT & ASSOC are engaged, the client is assured of obtaining the maximum possible deduction from the property.

Over a number of years BMT & ASSOC have developed an integrated property assessment system that ensures the maximum number of depreciable items are identified. This increases the client’s tax deduction in the first five years of ownership. This in-house program allows BMT & ASSOC to deliver significant time and cost savings in the preparation of a depreciation schedule, therefore decreasing the cost to the client.

BMT & ASSOC constantly liaise with the Australian Tax Office and therefore identify the maximum amount of depreciable items, generating a greater deduction, and reducing the client’s taxable income.

BMT & ASSOC provide an Australia wide service dedicated to maximising property tax depreciation deductions from individual property investments to large property portfolios.

Maximising Tax Credits from
an Investment Property

Many property owners are losing potential credits by failing to take full advantage of a property’s tax depreciation potential. An often overlooked method of obtaining tax credits, property tax depreciation is available to any property owner who obtains assessable income by way of rent or operates a business from a property.

Answers to some of the key questions asked regarding depreciation of investment property are:

As a general rule any property constructed after 17 July 1985 (residential) and 20 July 1982 (non-residential) is eligible for the construction write-off allowance;
All buildings, regardless of age, will attract depreciation and the building write-off allowance if refurbishment works have been undertaken since 17 July 1985 (residential) and 20 July 1982 (non-residential);
All external works including fencing, paving, pergolas, garden sheds etc constructed after February 1992 will attract the building write-off allowance;
A depreciation report can be prepared to allow a client to easily recover missed depreciation benefits (up to a period of four years) by amending previous tax returns.

When Can You Benefit From Depreciation?

Expert consultation at the initiation stage of a new project employed for the marketing of the property’s available tax depreciation to potential investor purchasers. Also, tax depreciation consultation at the feasibility study phase provides an insight into the long-term depreciation projections of a project.

The completion of a new building.

A comprehensive analysis of a completed building ensures the maximum number of depreciable items are identified and the deduction is maximised. A comprehensive depreciation schedule will ensure full ATO compliance of returns.

The purchase of an existing property.

If a cost schedule is not included in the contract of sale documents, BMT & ASSOC can revalue the items of plant and equipment based on the sale price. A comprehensive analysis of the building ensures all depreciable items are identified and claimed and that the Division 43 component is established.

Maximising Your Property's Tax Depreciation Potential

All types of income producing properties have substantial taxation benefits, over and above negative gearing, that the owner is entitled to claim as a tax credit. Any property, which is either rented or used for income producing purposes, is eligible to be depreciated.

In order to maximise the tax benefit a particular property will attract, the owner will require the services of a recognised property tax depreciation expert with specific construction costing skills and experience.

Tax legislation recognises only certain professionals within the construction industry as having the relevant qualifications to estimate the cost of building components for tax depreciation purposes. BMT & ASSOC, as quantity surveyors, are recognised by the Australian Taxation Office as having the expert qualifications and experience to produce estimates of construction costs.

The process of maximising a depreciation claim is based on an intimate understanding of the Income Tax Assessment Act, applicable Income Tax Rulings, Case Law and specific construction costing skills. Each property scenario is different and must be analysed by a specialist to optimise the depreciation benefits.

Particular buildings that will attract a claim include: investment apartments, houses, townhouses and duplexes, warehouses, commercial office buildings, office towers, shopping centres, childcare centres, hotels, nursing homes, hospitals, retail centres, industrial complexes and government properties for sale. Basically any building that is used for income producing purposes has potential for tax depreciation.

Building Type	Purchase Price	Year 1 Depreciation	Year 1-5 Cumulative Depreciation
1 BR Unit	$300,000	$8,000	$38,000
2 BR Unit	$400,000	$10,000	$45,000
3 BR Unit	$450,000	$12,000	$55,000
Townhouse	$300,000	$6,000	$25,000
Townhouse	$400,000	$7,000	$30,000
Residential	$250,000	$5,500	$24,000
Residential	$375,000	$6,500	$28,000
Commercial	$2.5m	$100,000	$450,000
Industrial	$1m	$35,000	$165,000

Disclaimer:
The figures portrayed have been generated based upon assumptions of construction type and the quality and condition of inclusions held within a given property. The calculations are based on ownership over a full financial year. This example is intended to provide a guide to the potential depreciation available under various scenarios.

The figures portrayed in this table are not recognised by the Australian Tax Office and should not be used in any form. BMT & ASSOC does not accept any contractual, tortious or any other form of liability for any consequences, loss or damage as a result of any person acting upon this estimate.

This page is provided by BMT & ASSOC.