As one of the four tennis Grand Slam tournaments, the Australian Open moves into the business end of the competition. Players will dig deep, steel their focus and demand more from their bodies in order to take their game to another level. At the end of it all there can only be one winner, and those who win will be those whose tennis game both mentally and physically has come together for the crucial part of the tournament.
With property depreciation you can always win by getting more out of your depreciation claim with our 4 grand slams of depreciation tips. Become BMT Smart and take these tips into account to start maximising your depreciation deductions.
Get more out of your property depreciation claim with these simple tips
A large part of property investing is maximising your tax deductions. While many investors fail to claim property depreciation, many more may be aware but are missing out by only claiming a fraction of their full depreciation entitlements.
Here are some ways property investors could be able to increase their yearly tax deductions by thousands.
New and older properties have depreciation claims available
As a property gets older, its value naturally depreciates with or without a tax deduction claim. The older a property is, the less value remains to be depreciated and claimed for. A new property allows investors to claim far more depreciation deductions as the property has lost little or none of its original value. Additionally, while plant and equipment deductions can be claimed for all investment properties, capital works deductions cannot be claimed on residential properties constructed prior to 15th September 1987.
Don’t overlook capital works deductions
Statistics released by the Australian Tax Office (ATO) indicate that approximately 2.5 million property investors claimed some form of deduction for the 2011-2012 financial year. Of these, 1.7 million investors claimed property depreciation for plant and equipment, while only 1 million investors claimed deductions for the building’s structure and fixed assets as capital works deductions. If your investment property was constructed from 15th September 1987 onwards and you are not claiming capital works deductions, you are missing out on dollars in your pocket. Even if you haven’t been claiming these deductions previously, the ATO allows two previous tax returns to be amended to recoup missed deductions.
Claim renovations completed by the previous owner
Anything in the property that occurred in a previous renovation can be estimated by a Quantity Surveyor and deductions calculated accordingly. This includes items that are not immediately obvious, such as an old extension or new plumbing. For capital works to be eligible for the capital works deductions, construction must have commenced within the qualifying dates; after 15th September 1987 for residential properties and from 20 July 1982 for commercial buildings.
Get back what you throw away
When property investors start watching too much of ‘The Block’ or ‘House Rules’ and begin planning renovations to their investment property, it is little known that they are able to claim tax deductions for assets discarded during renovation. By organising depreciation schedules both before and after the renovation to support their claim, investors are able to claim any remaining deductions from the items being removed and start claiming depreciation on the newly installed items.
For savvy property investors, property depreciation offers significant tax allowances. The above four tips are just a few of the ways that a comprehensive and accurately prepared depreciation schedule can help improve an investors’ cash flow. Want to know more? Call us on 1300 728 726 or complete this form and we’ll be in contact with you to discuss your property.