Annually, people lose millions and millions on their properties owing to unforeseen natural calamities. These unforeseen disasters hit them like a wave leaving nothing but ruins. Natural disasters especially affect realtors and property investors. These participants of the property market more often than not, find themselves in heavy debts and losses.
Such stressful situations call for replacement of assets as well as rebuilding and refurbishing all their entire property.
The brunt of this challenging process has to borne by both the property owner as well as the tenant. However, the final improvement brought upon the property makes it for a better asset. And thus invites a rather increased depreciation deduction tax. This tax depreciation must be studied properly.
How to Maximise As Well As Maintain the Compliance?
The following table will indicate exactly how you can optimise your compliance for depreciation deduction levied on your disaster-ridden property. And hence give you a better insight into depreciation tax benefit.
|Asset||Properties Covered in Insurance||Properties NOT Covered in Insurance|
|Replaced||Will need to make alterations in the Tax Depreciation Report||Scraping of the residual value of the replaced asset + calculating depreciation for the new asset.|
|Repaired||Instant deduction of the expenses for repairing + declare any arising income from insurance||Instant deduction of the expenses for repairing|
|Upgraded||Will need to make alterations in the Tax Depreciation Report||Scraping of the residual value of the replaced asset + calculating depreciation for new asset.|
The Jargon of the Table
- Repaired: It refers to the minor tweaks here and there in the pre-existing asset to restore it. It doesn’t mean improving upon its appearance but only the functionality.
- Replaced: This refers to procuring a replacement for the pre-existing asset which mimics its exact functionality and usage. In short, a new asset of the same model in place of the original mode.
- Improved or Upgraded: This refers to the replacement of the damaged asset or machinery. However, here the new model so procured is an improvement or upgrade to the existing asset. Which means a better functioning and more specifications.
The entire property of availing deppro benefits can seem a little daunting but here’s how it goes down:
In case the quantity surveyor has initially assessed the entire property which is being claimed for then it gets easy. As now it only requires adding alterations to the previous report which can happen at a minimum cost.
But, in case the prior assessment of the property in question didn’t take place, then it gets more cumbersome. As now you need a full inspection followed by creating a report.
This should be noted that the time of the entire procedure is crucial and thus it should be attended as soon as possible. We suggest you to approach our experts with individual situations or crises. This will ensure that all your previous, current as well as future claims are optimised. They will also ensure that if your claims are in compliance with the ATO guidelines or not.
Disasters don’t come announced, they can hit you anytime, anywhere without notice or warning. Such situations can have repercussions. So it’s best that you’re prepared with all the ins and outs of knowing your depreciation for property.
Our website is specifically curated to deal with such mishaps. Hence, if you’re facing something similar or you may want to be prepped for the future, then contact us. We will tell you all there is to know about the procedure for claiming depreciation on the property as well as its implications.
So what are you waiting for? Contact us today!