Invest smarter with a depreciation schedule

A depreciation schedule prepared by a specialist Quantity Surveying firm such as BMT Tax Depreciation helps to ensure that you are maximising the cash return from your investment property.

What is in a depreciation schedule?

When a Quantity Surveyor completes an investor's Capital Allowance and Tax Depreciation Report, two main elements are taken into consideration:

Capital works allowance: The capital works allowance is a deduction available for the structural element of a building including fixed irremovable assets; this is commonly referred to as the building write off. Only some properties will qualify for this allowance. Depending on the age of the building you can claim either 2.5% or 4% of its historical construction cost as the following chart represents.

Captital Works Allowance graph.

Plant and Equipment: The plant and equipment element is a deduction available for removable assets which are identified through ATO legislation as assets which depreciate at a faster rate than the building. Each plant and equipment item has an effective life and the depreciation available on that item is calculated accordingly.

How much depreciation can you expect to claim?

An investor’s depreciation benefits vary depending on the type of building, its age, its use and its fit out. Commercial, industrial and residential investment properties can all claim depreciation based on the Diminishing Value or Prime Cost methods of depreciation.

Ensuring that each depreciation claim is maximised on any building requires a combination of construction costing skills and thorough knowledge of current tax depreciation legislation. For this reason, it is recommended for investment property owners to consult a specialist Quantity Surveyor to prepare a depreciation schedule before lodging their tax return.

Residential & Commercial Depreciation Examples

The depreciation benefits depend greatly on the type of building, its age, use and fitout. Based on the Diminishing Value method of depreciation, several scenarios are provided below as an appropriate guide. For more information visit our case studies page to see the difference that a tax depreciation schedule makes for both residential and commercial property types.

Residential & Commercial Depreciation Examples.

BMT Tax Depreciation is a team you can trust

BMT Tax Depreciation is accredited with the Australian Institute of Quantity Surveyors (AIQS), The Royal Institute of Chartered Surveyors (RICS) and The Auctioneers & Valuers Association of Australia (AVAA). BMT Tax Depreciation pride themselves on providing prompt and professional service to our clients. Read more about our industry accreditations

When enlisted to provide a BMT Capital Allowance and Tax Depreciation Schedule for your property, BMT Tax Depreciation will:

Visit the site and carry out a detailed inspection of the property including identifying, measuring and photographing eligible depreciable assets.
Compile the necessary detailed records and photographs for future substantiation of the claim with the Australian Taxation Office (ATO) in accordance with (TR97/25).
Examine all available documents associated with the property; determine the extent of their usefulness for the purposes of the claim.
A detailed tax depreciation schedule will then be prepared within 5-7 days after site inspection.

What is included in a BMT Capital Allowance and Tax Depreciation Schedule?

A detailed tax depreciation schedule document will then be prepared for the building and would include the following components:

  • A method statement;
  • Summary of Diminishing Value Method of Depreciation;
  • Summary of Prime Cost Method of Depreciation;
  • Detailed 40 year forecast table illustrating all depreciable items together with building write off for both Prime Cost and Diminishing Value methods;
  • Comparative table of the two methods of depreciation;
  • The report is pro-rata calculated for the first year of ownership based on the settlement date so that the accountant has the exact depreciation deductions for each year.

The tax depreciation schedule provides the basis for claiming both Division 40 (plant and equipment) and Division 43 (capital allowance). BMT Tax Depreciation specialise in maximising the total depreciation available from a given property under current legislation.

What are the steps to organising a BMT Capital Allowance and Tax Depreciation Schedule?

Step 1:Phone your nearest BMT Tax Depreciation office for a quote, alternatively complete the online request form.
Step 2:Once the quote is accepted, we will arrange access to the property with your property manager and/or tenant.
Step 3:A BMT Tax Depreciation staff member will visit your property and measure the building, assess the construction and record all depreciable plant and equipment items (including common areas in a strata complex).
Step 4:Using information from the inspection and other relevant sources, BMT Tax Depreciation will then complete your report outlining exactly how much depreciation you are entitled to each year, for the life of the property.
Step 5:After a thorough quality assurance procedure involving the cross checking of all figures, the report is either posted or emailed to you and/or your accountant.

The property depreciation schedule will ensure maximum depreciable items are identified and will take into account the pooling of low-cost and low-value items allowed within the capital allowance system. The property depreciation schedule is valid for the life of the property or until capital improvements are undertaken. It is the aim of BMT Tax Depreciation to make the process as easy as possible for the client, gathering all information and preparing the property depreciation schedule with a turnaround time of approximately 5 days from the inspection.

Read more about how BMT Tax Depreciation works to give property investors more.