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Sunshine Coast Tax Depreciation
ACCORD Quantity Surveyors

Rental Property Tax Depreciation

For those who invest in rental property on the Sunshine Coast, tax depreciation is one of the most overlooked methods of earning extra money. On average, a typical investor may save up to $9,000. However, up to 80% of investors who qualify each year fail to take advantage. Most likely because this is a non-cash deduction, so investors do not have to spend money to claim it. Which is why it is so often not utilised.

Another reason is how tax property depreciation works may not be all that clear. What follows is a guideline to help you better understand how rental property owners can take advantage.

What is Rental Property Tax Depreciation?

Put simply, the older and more wear a property gets, the less in value they become. Such depreciation can be claimed on your taxes under plant and equipment assets or capital works.

Capital works deductions apply to structural wear and tear, such as cupboards, doors, and the like. If the property was built after 15 September 1987, then you may qualify for a capital works deduction. Such deductions may be claimed at 2.5% annually for 40 years.

But if your rental property is older, then you should consider that any renovations that have occurred after the 15 September 1987 date may qualify the building for capital works deductions.

Plant and equipment assets apply towards fixtures and fittings that can be easily removed. Examples include air-conditioners, carpets, hot water systems, smoke alarms, and the like. Tax deductions for plant and equipment assets are based on the individual item. Keep in mind that recent legislative amendments may have been altered in terms of their application and benefits.

How to Approach Renovation?

You tax depreciation schedule should be prepared before you start any renovations on the rental property. You may find considerable deductions available both for the plant and equipment assets along with any structural changes you are going to make. Eligible assets that have yet to be deducted may qualify for depreciation in the year that they were removed.

Keep in mind that if you live on the rental property when renovating, plant and equipment assets that were recently installed will be considered as previously used, so you cannot claim them as tax deductions. If you move off the property, then newly installed plant and equipment assets may be claimed.

Tax Depreciation Schedule

If you are considering claiming tax depreciation, then you will need to prepare a proper schedule. You can get the most out of your schedule by having it prepared by professionals. You may find that there are many items or parts of the structure that may be claimed as part of the tax depreciation process. We do have some Property Frequent Questions here.

For the rental property investor, taking advantage of tax depreciation can help you keep more money in your pocket without having to make additional expenditures. It takes a little time to find out if you qualify for the tax depreciation. If you do, then as a rental property investor you can use that additional money to make improvements or find other uses for it.

Contact Bobby who has been looking after people just like you for for over 30 years.

For Property Depreciation and Tax Allowances on investment properties please complete the information worksheet relevant to your property type.