People buy into an investment property for a variety of different reasons, but they all share the hope that the building they get will be profitable for as long as they own it. While renting out the property to a good tenant is always a good thing, it’s also important that investors don’t leave money on the table, which means having an understanding of tax depreciation. Everyone is well aware that buildings, as well as the fixtures inside them, deteriorate over time, but it’s not every Noosa and Sunshine Coast area property investor who is aware that those items can be claimed come tax time.
There are a few things to understand about tax depreciation, the first of which is that only certain properties apply, which is based upon the construction date of the said building. For example, investors looking to claim tax depreciation on a residential property could do so if they have a property that was built after September 15, 1987. The deductions available for that 40-year period would come in at 2.5% for approved items. For commercial building owners, the type of building that is owned will dictate the level of depreciation.
The problem that investors face here is that it is not a simple case of applying that 2.5% to everything across the board, as not all the construction elements of the property can be claimed. You also need to know what the constructions costs were when the building was built, which is not something that the average person is going to know, no matter how hands on they may be with their property. It is always best to leave this part of the business to the professionals, which means hiring a quantity surveyor and a tax professional to do the work.
Before you hand over all your details to a tax professional, you should have a quantity surveyor go over your building with a fine-tooth comb to see exactly what can be claimed in tax depreciation, and how much can actually be claimed. Having a professional put together a tax depreciation schedule is an absolute must, simply because if you try to do it on your own, you will more than likely make mistakes in the costs and valuations of each item, and you may even include things that would not be allowed. It’s better to have it done properly at the first time of asking than continually needing to go back and make changes.
One of the great benefits of having the tax depreciation schedule put together by an experienced quantity surveyor is that he final report will break down everything in excruciating detail. You will see exactly how much each item has been valued at, and you will also have a glossary of term included with the report to help you better understand some of the finer points of tax depreciation. Every penny counts when you are trying to make money with an investment property, so wouldn’t it make sense to invest in professional help?
For Property Depreciation and Tax Allowances on investment properties please complete the information worksheet relevant to your property type. Submit online or print and fax.
Our fees are tax deductible as an expense and a receipt is included with your report.