Investment strategies can be diverse and when the market tightens, some investors partner up to get their foot on the property ladder. Not only does this mean upfront expenses are divided between multiple people, but it also means ongoing expenses are more affordable while apportioned deductions can also be claimed.
Jointly-owned investment properties are unique and require the parties to work together to maximise their return on investment. A correctly split tax depreciation schedule will help.
In this article we will look at:
Why split schedules are important
A tax depreciation schedule for a jointly-owned investment property provides deductions based on each owner’s ownership interest. Whether the ownership split is 50:50, 40:30:30 or 60:20:20, split schedules can maximise depreciation deductions for all parties involved.
We often see split schedules result in more assets qualifying for the immediate deductions or low-value pool sooner. Additionally, split schedules are an essential tool to ensuring that all depreciation deductions are claimed with 100 per cent compliance.
How we do it
The process of preparing an accurate tax depreciation schedule is crucial to splitting deductions appropriately.
By completing a physical site inspection of the property, identifying every depreciable component available and determining the depreciable value, the pro-rata splitting can be applied.
On surface level, the BMT process of completing split schedules is the same as individually-owned property schedules. However, our well-established quality assurance process allows us to split the schedules so that each owner has their own amount to claim based on their portion owned and interest in the particular asset.
The difference – with and without a split schedule
Dale and Kate own an investment property together. They are classed as joint tenants, with a 50:50 ownership interest. They completed a small kitchen renovation on the property. This included capital improvements and installation of new appliances.
A dishwasher and freestanding stove were installed during the renovation. The below demonstrates how much they boosted their deductions sooner with a split schedule on these two assets alone.
By using a split depreciation schedule, Dale and Kate could place their stove in their low-value pools. It was also possible to claim the new dishwasher in full in the same financial year with the immediate deduction.
For more information on our services and how we work with you to ensure your clients claim maximised and compliant depreciation deductions, visit our website or call our specialist team on 1300 728 726.