The Australian Taxation Office (ATO) legislation states that only the owners of income producing properties are entitled to claim depreciation.
However, as an increasing number of Australian home owners decide to invest in property, many are also choosing to rent out their principal place of residence.
Home owners choose to rent out their principal place of residence for a number of reasons. It may be due to a need to relocate interstate for work, travel for a period of time overseas, to purchase and occupy another property, or even just to let out a part of the property.
Though home owners generally cannot claim depreciation for the period of time they are living in the property, they are still able to make a claim for both capital works deductions and plant and equipment items contained within the property for the time the property is income producing.
Home owners also may be entitled to claim a percentage of depreciation for a part of a household being rented out. Examples include a separately rented granny flat, a room let out for student accommodation, or a section of the household such as the downstairs area let out for additional income while the owners still live upstairs.
A BMT Tax Depreciation Schedule can calculate the depreciation based on the exact number of days a property has been rented in the first financial year for properties which are only rented certain portions of time.
For properties where the owners have only rented a part of the property, BMT will produce a tax depreciation schedule for the entire property. The owner’s Accountant will then be able to make a claim based on the portion of the area which is being rented.
If a home owner is earning income from their investment property for any period of time, it is always worthwhile consulting with a specialist Quantity Surveyor to find out more.
For an additional article which also answers some questions regarding depreciation and your principal place of residence, please visit the following link: