28 June 2016
Depreciation is one of those beautiful tax advantages we are able to capitalise on when buying a new or refurbished investment property. We all love the current stamp duty concession and we enjoyed the previous building construction grants, but for some reason depreciation can be the forgotten tax benefit that can really make our investment properties work for us.
Affordable Property Management has a huge number of clients with properties under five years old and we are sometimes surprised to hear that a client hadn’t received advice from their accountant or selling agent to obtain a Depreciation Schedule. In some cases, clients have mentioned that they just never ‘got around’ to getting one done.
With 30 June 2016 arriving on our door step, now is a quick time to get yourself organised with a Tax Depreciation Schedule (if you haven’t already!) and we can help get you started.
BMT Tax Depreciation specialist appears to be a major provider of this service in South Australia and so we have asked them to provide a brief information piece for our clients. Given our association with new properties, we have obviously pointed a few clients in their direction given this and the large discount they are willing to provide if your property was new and you are able to provide floor plans and a list of inclusions. If you need a report prepared please speak to us so we can point you in the right direction - whether that is BMT or another suitable provider depending on your circumstances.
A word from BMT Tax Depreciation
Maximise property depreciation this tax time:
The Australian Taxation Office (ATO) allows property owners to claim depreciation on the structure as well as the plant and equipment assets contained within any income producing property.
Depreciation related to a building’s structure can be claimed via a capital works deduction while plant and equipment assets are deducted based on an individual effective life set by the ATO.
As a general rule, residential properties in which construction commenced after the 15th of September 1987 and commercial properties in which construction commenced after 20th July 1982 are eligible for capital works deductions.
Deductions for plant and equipment assets are not limited by age, rather the condition and quality of each individual asset. Examples of depreciable plant and equipment items include hot water systems, carpets, blinds, smoke alarms, garbage bins, ovens and air conditioners.
Generally, newer properties with newer fixtures and more expensive construction costs will attract greater depreciation deductions simply because they have not depreciated in value as much as older properties. However, older properties still attract depreciation. It is always worth enquiring about the possible depreciation deductions available on a current or potential investment property.
On average, BMT Tax Depreciation finds between $5,000 and $10,000 in depreciation deductions in the first full year alone for their clients. By claiming depreciation, investors can improve their available cash flow and put thousands of dollars back in their pockets.
As a non-cash deduction, depreciation is often missed. To ensure depreciation is maximised, investors should contact a specialist Quantity Surveyor and obtain a tax depreciation schedule for their investment property.
The schedule will show deductions for the life of the property (forty years) and will ensure the property owner claims all of their depreciation entitlements. The fee for a tax depreciation schedule is 100 per cent tax deductible.
Property investors can estimate the likely depreciation deductions for any property by using the BMT Tax Depreciation Calculator.
To request a quote or make an enquiry, simply click here or alternatively contact one of BMT Tax Depreciation’s expert staff on 1300 728 726.
Article provided by BMT Tax Depreciation.
Bradley Beer (B. Con. Mgt, AAIQS, MRICS, AVAA) is the Chief Executive Officer of BMT Tax Depreciation.
Please contact 1300 728 726 or visit www.bmtqs.com.au for an Australia wide service.