No-one ever buys an investment property in hopes that they will end up losing money, yet there are a lot of people who do just that because they didn’t ask the right questions going in. Was the property in a location that was desirable to renters, was it set at a price that was on par with other rental properties in the area, and did the owner get as much out of the investment as the law allowed? That last question in particular is one that property investors need an answer to, as many of them leave money on the table come tax time.
If you own a car for work, you probably already know that you can claim on the wear and tear of said vehicle when having your taxes done. The same rules apply for your rental properties in Mooloolaba and all other areas of the Sunshine Coast, as you can claim tax depreciation on certain items within your investment property. There are some investors who are aware of this deduction, and who try to do it on their own, but if you get it wrong, you could still end up losing money. The best idea here is to hire the services of a professionally quantity surveyor to put together a tax depreciation report.
So, how exactly does tax depreciation work when it comes to your investment property? It can be a little complicated, which is again why the pros should handle that side of the business, but we can try to break it down as simply as possible. You are able to claim depreciation on the building materials for the first 40 years of the life of the structure, with 2.5% of the total cost available to claim for depreciation. What that means is that you would get a tax claim of $10,000 every year for 40 years if your property initially cost $400,000 to build.
What happens if your building is more than 40 years old? The tax office makes available a list of items that fall under the “plant and equipment” category that can be claimed in your taxes. These tend to be things like appliances and flooring, but again, there may be items in there that you would never think to claim on your own. A quantity surveyor knows exactly what appears on that list, and after inspecting your property, they can put together a tax depreciation report that covers all the items that can be claimed.
The reality here is that you are potentially leaving money on the table if you do not have a tax depreciation report put together for your Sunshine Coast properties. It is not as expensive as you might think to have a quantity surveyor do the work for you, and it is something that should be seen as an investment rather than an expense. This is money that you are entitled to as an investment property owner, so why would you not claim it?
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.