Several factors need to be considered when calculating how much depreciation is required to be offered a particular property. Among those factors, the type of the property is one of the crucial factors that you cannot overlook when preparing a property report. It may be either apartment units or houses. Striking similarities exist when you calculate depreciation for both – houses and apartments. It may include the price of the property and the age of the property. You will come across differences when you take into consideration how the property was built.
Here are some essential depreciation differences between apartment units and houses:
1. Amount of Labor:
When you build an apartment unit and a house, the amount of labor will be more for an apartment. This is due to the multiple floors in an apartment unit. And, this is the reason why the apartment unit’s build cost is different from house with regards to capital works also known as division 43. It is specifically the case for new apartment units with several floors. Apartment units are eligible to claim a small portion of the common areas that helps in enhancing the depreciation further. This claim can be made under plant and equipment (division 40). This means that an apartment unit owner is eligible to claim the equal amount or more depreciation. You need to find out your depreciation residential rental property in accordance with the rules.
2. Plant & Equipment:
The next vital factor is the Plant & Equipment aka Division 40 – that these two types of properties may claim. Both apartment units and houses are eligible to claim plant and equipment costs. This includes light, blinds, shades, etc. Owners will also be able to claim a portion of common strata tools spotted in the common areas of an apartment which may consist of lifts, gym equipment, and fire extinguishers. These items can be claimed under Division 40 of Plant & equipment. These additional sources of depreciation permit owners of apartment units to claim higher depreciation in comparison to houses. You can prepare your tax depreciation schedules on the basis of these items. If doubts persist, you may hire a quantity surveyor.
3. High Cost of Construction:
Owners of apartment units will be able to get more tax deductions per year compared to a house owner. This is because of the higher cost of construction and eligibility to claim various strata items for apartment owners.
An apartment unit will fetch higher tax deduction in comparison to a house. You may seek the services of a quantity surveyor who will carry out a site inspection. The quantity surveyor must have a vast knowledge of Australian tax return; which will help to establish the amount of plant and equipment items on the property and take measurements of the property and make vital notes to boost the depreciation schedule.