TAX TIME - Get the most out of your deductions!

Written on the 8 June 2020

Did you know that 70-80% of property investors don't get their tax depreciation done properly potentially missing out on thousands of dollars in savings?!

Tax depreciation doesn't need to be confusing. Having a good understanding of tax depreciation will allow you to develop smarter tax minimisation strategies with greater opportunities for deductions that could save you thousands of dollars.

Claiming tax depreciation deductions should be an important part of any property investment strategy. There are some basic tips to know when maximising cash return from a residential or commercial investment property.
One of the most important things property investors need to know, is that there are two key components of depreciation capital works and plant and equipment.

1. Capital works

Capital works refers to claims against the structure of the building that includes the floor, walls and roof, and those things that generally last the lifetime of the property. The ATO allows property investors to claim a deduction related to the wear and tear of those components of the property and these deductions reduce the taxable income for the property owner.

For residential properties built after July 18, 1985, property investors can claim a building write-off allowance up to 2.5%, claimable over 40 years. There is even greater opportunity for further deductions, depending on the specifics of your property, which is why it's important to talk to a specialist to find out more about what you are eligible to claim, so you don't miss out on any tax-minimising entitlements.

2. Plant and Equipment

When it comes to plant and equipment-related deductions, Bradley says that these items include things such as:

carpet;
blinds;
dishwashers;
security systems;
air-conditioners;
as well as other items within the property.

It's important to note that recent changes to the Federal Budget mean that, in order to claim this equipment, you need to have bought it yourself - subsequent owners of the investment property can't continue to claim against it in the future.

Find a qualified, experienced accountant

If you are a property investor, tax depreciation is an important aspect of your tax return - and doing it properly is a great reason to have a qualified, experienced accountant working with you. It's also recommended to have an experienced quantity surveyor who can organise the depreciation schedule that your accountant needs to manage your deductions accurately.

Unfortunately, it's an aspect of their tax return that too many property investors overlook. About 70-80% of investors don't get their deductions done properly!

Contact us should you need to know more about how you can maximise your property investment.