Depreciation is one of the biggest tax deductions that a property investor can claim, yet far too many people fail to take full advantage of it.
There are several reasons for this. Some people automatically dismiss depreciation, thinking that it doesn’t apply for their second-hand property. Others simply don’t know it exists.
One of the biggest, and completely unavoidable, reasons investors miss out is cutting corners where their tax depreciation schedule is concerned.
Tax depreciation schedules must be prepared by an expert
A tax depreciation schedule prepared by a specialist quantity surveyor ensures all legislative requirements are followed and that every depreciable part of a property is identified. ATO compliance can also be maintained in the case of an audit.
This schedule can be used for the lifetime of the property and can be updated if any improvements are made, providing the perfect base for all future depreciation claims.
Depreciation is the only non-cash deduction available to property investors, meaning that no money needs to be spent to claim it. The cost to prepare the schedule is also tax deductible.
A specialist will find all the deductions
An investment property may contain many discreet depreciable items tucked away behind walls, doors, underground or up high out of sight.
For things like electrical wiring behind walls, a quantity surveyor will verify the depreciable value to ensure all future depreciation claims are accurate.
For something really obscure, such as solar panels on a roof or an internal air-conditioner grille, the quantity surveyor will not only identify the asset in the first place but will cost it accordingly.
Another way a specialist finds hidden deductions is through identifying renovations and extensions made by a previous owner. Even if the renovation was made 20-plus years ago, substantial depreciation deductions could still be there to claim.
Hidden deductions make a big difference
The following table shows total depreciation deductions for some of the concealed items that can be found in an average sized 200sqm house.
These are just some of the hidden deductions that could be claimed. But by doing so, cash flow can be boosted by tens of thousands over the lifetime of the property investment.
The expert team at BMT conduct physical site inspections to ensure nothing is missed. Our specialist site inspectors go to the property and leave no stone unturned, resulting in every depreciable item and qualifying structure being found.
If you would like to organise a 100 per cent obligation-free tax depreciation schedule quote for a client, contact us today on 1300 728 726.