Property Tax Depreciation Reports in Perth


   What is Tax Depreciation?

   What depreciation am I entitled?

   What is a property depreciation report?

   What is the benefit of tax depreciation for property investors?

OVERVIEW

What is Tax Depreciation?

Tax depreciation, which is also known as property depreciation, is a legitimate deduction against assessable taxable income, generated by a residential or commercial investment property. According to the Australian Taxation Office (ATO), under Income Tax Assessment Act 1997, owners of investment properties are entitled to claim depreciation on the building and its fixtures and fittings. Claiming depreciation is a significant taxation benefit, and one which many investors are unaware of. Depreciation is a non-cash deduction – you do not need to spend any money to claim it. Major traps that most of the property investors fall into are; - Not claiming depreciation as they believe their properties are too old and not entitled to claim any depreciation - Depreciable items are claimed as a repair. There is a common misconception that only new properties are eligible for depreciation. This is not the case. Whilst it is true that new properties attract higher returns of depreciation, older properties can produce attractive returns also. In fact, in most cases, a deduction of some tangible value is attainable. In assessing whether a repair is an allowable deduction, the Australian Taxation Office (ATO) looks at whether the claim relates to an actual repair, or improvement. The definition of repairs is an expense incurred in restoring an income producing asset to the condition it was in when it first became income producing and hence, can be claimed in the year the remedial works were undertaken. An improvement on the other hand is not claimable as a direct deduction, however may be depreciated under the capital allowance deduction over the course of 40 years at a rate of 2.50% per annum.



What depreciation am I entitled?

As per the guidelines set out by the Australian Taxation Office (ATO), if you own an investment property (whether its new or old, large or small), two areas of depreciation are available: 1. Plant and Equipment (Division 40); and 2. Capital Works on the Building (Division 43). Different items within a rental property have different rates of depreciation based on the effective life of the item. Our quantity surveyors are professionally qualified and have the expertise and knowledge to know which items are depreciable and how savings can be made. To claim maximum tax benefits on an investment property the Australian Taxation Office (ATO) requires property investors to complete a fully compliant Tax Depreciation Report. Our quantity surveyors are Associate Members of the Australian Institute of Quantity Surveyors (AIQS) and Registered Tax Agents with Tax Practitioners Board (TPB). Therefore they are qualified to produce ATO compliant Tax Depreciation Reports.



What is a property depreciation report?

A Tax Depreciation Report (also called a Depreciation Schedule) sets out all tax depreciation and building write-off claims for a new or existing investment property. Our property depreciation tax report provides a schedule for capital works allowance (building write-off) and depreciable assets (plant and equipment allowance) on an investment property, ensuring owners receive the maximum tax entitlements. Based on your allowances, the report calculates the amount you can deduct each year as part of your tax return.



What is the benefit of tax depreciation for property investors?

Claiming tax depreciation allowances on an investment property increases its value by giving investors greater return on their investment. Depreciation allowances combined with additional negative gearing factors such as interest on a mortgage, repairs and maintenance can help investors reduce their taxable income, pay less tax and improve cash flow. The savings made can then be redirected to other areas, such as an investment mortgage or other debt reduction. We can help all owners achieve maximum tax benefits from their investment property, no matter the size or age.



For more information on how property depreciation can reduce your tax, please call 08 6558 1844.