If you are in the business of rental properties one can fairly surmise that you are looking to make some money. It is fairly uncommon for someone to go to the hassle of amassing a rental empire simply because they think it will help their chances of getting on ‘The Block’. Yet the majority of property investors are failing to take advantage of the property depreciation benefits afforded to them by the Australian tax system, potentially losing out on thousands each year.
If you derive taxable income from your property assets than you are eligible to claim depreciation benefits on not only the structure of that property but also the plant and equipment within it.
There are some key points to consider when claiming depreciation on your rental property:
- Trust the experts
All depreciation claims must be supported with a report by a licenced and qualified Quantity Surveyor in order for the claim to be valid. These individuals are trained to assess your property for its value and the value lost due to wear and tear. When hiring a Quantity Surveyor always ask for proof of their credentials, including professional membership to ensure that work will be carried out according to tax office standards. What may seem like an unnecessary cost could prove an unexpected windfall as Quantity Surveyor will often point out items of depreciation that you would have never thought of.
- Age is only a number
Many investors ask if their properties are too old to claim depreciation on. The simple answer to this is no. All properties that were constructed after July 1985 are able to have depreciation of both the structure and plant and equipment claimed. Those that were built prior to this are unable to claim structural depreciation but can still claim on plant and equipment items such as hot water systems, ovens and furniture within the property.
You are able to claim depreciation on your property even if it is renovated. If the renovations were completed by yourself than you must supply the value of those renovation however if the work was carried out prior to you purchasing the property than the Quantity Surveyor that you have hired to complete the depreciation schedule is able to make estimations as to their value. Renovations can include several items that are not immediately obvious such as car ports, pergolas and new plumbing infrastructure.
- Life span of a property
The Australian tax system dictates that owners can claim depression on business properties for up to 40 years. That is to say that an owner can claim depreciation for 40 years from the date of construction and if the property has been purchased by the owner after construction they are able to claim depreciation for the balance of 40 years from date of construction.
- Show me the money
The value of depreciation claims can vary greatly between properties and are dependent on a variety of factors such as property value, age, location, contents etc. Regardless on the value of the return, declaring property depreciation is a worthwhile use of your resources. Most Quantity Surveyors also offer a guarantee that will ensure that you do not lose money from having a depreciation schedule created, thus minimising any risks to you.
Looking to maximise the return on your investments? The expert team at Infinite Wealth are on hand to provide advice on how to make the best decisions for your financial future. Get in touch with us today on 08 9438 6333 or click here to contact us.