WHAT IS TAX DEPRECIATION? 

Tax depreciation is just like you claim wear and tear on a car purchased for income producing purposes, you can also claim the depreciation of your investment property against your taxable income.

There are two types of allowances available:

• depreciation on Plant and Equipment (Division 40 Plant Allowances)

• depreciation on Building Allowance (Division 43 Capital Works)

Plant and Equipment refers to items within the building like ovens, dishwashers, carpet and blinds etc.

Building Allowance refers to construction costs of the building itself, such as concrete and brickwork. Both these costs can be offset against your assessable income.

What is the Rate of Depreciation for Residential Property?

 Figure 1 Timelines for Residential Property

If your building was built prior to 1985, however renovation (i.e. new kitchen, bathroom etc) was carried out after 1985, they can be included. Where the cost of renovation is unknown, a Quantity Surveyor has been identified by the ATO as appropriately qualified to make that estimation.

Why you should get a tax depreciation report?

A depreciation schedule will help you pay less tax. The amount the depreciation schedule says you claim effectively reduces your taxable income.

Your accountant can amend your previous tax returns up to two years back. There are some exceptions, so contact your tax agent or the ATO for clarification.

Who is Quantity Surveyor?

“Quantity surveyors are specialists in the accurate measurement of construction costs with a view to maximizing a client’s financial position in relation to their property assets. Only a fully qualified quantity surveyor brings the appropriate education, experience and training to provide reliable figures upon which to base a property tax depreciation schedule. One doesn’t want to rely on best guesses when dealing with the ATO – especially when there is professional help available,” says Terry Aulich (Chief Executive Officer of the Australian Institute of Quantity Surveyors (AIQS))

Tax Ruling 97/25 issue by the Australian Taxation Office (ATO) has identified Quantity Surveyors as properly qualified to make the appropriate estimate of the construction costs, where those costs are unknown. Real estate agents, Property Managers and Valuers are not allowed to make this estimate.

How does it work?

If you are still unfamiliar with the process, it worth give us a CALL. We are happy to assist and answer any queries. Lastly, Quantity Surveyors fees are 100% tax deductible too. We are confident in our expert services to improve your tax situation and we guarantee that if the first full year’s depreciation value is not at least twice our fee then the report is free.