The property tax depreciation schedule is not just restricted to the professionals. Anyone purchasing a property for the purpose of generating income will be allowed to depreciate both items within the building and the cost of the building. And, the savings will be huge. Before you move ahead, it is important to find the meaning of property depreciation. A property investor will receive two types of allowances. These are depreciation on plant and equipment and depreciation on building. Plant and equipment includes items inside the building like ovens, dishwashers, blinds, and carpet, among others. The building allowance includes the construction of the building itself. It will include expenses like timber, brickwork, concrete construction, etc. These expenditures are permitted to be offset against the assessable income.
So, discussed below are the important things you must consider when claiming property depreciation:
How Will A Depreciation Schedule Assist You?
It is not at all complicated. A depreciation schedule will go a long way in helping you pay less tax. Your taxable income will be lowered by the amount that the depreciation schedule states. Depreciation can be described as a non-cash deduction, as it has emerged as the only deduction that you are not required to pay for. The deductions are included within the purchase price of a property. The remaining deductions like interest levies are expenditures that may hurt your pocket on a regular basis. You can hire professionals to calculate the tax depreciation cost precisely.
Is Your Property Too Old for Claiming Depreciation?
If your residential property happened to be constructed after July 1985, you may claim both building allowance and plant and equipment.
Who Can Prepare a Depreciation Schedule Report?
It is worth noting that real estate agents and property managers aren’t permitted to prepare a depreciation schedule. If your residential property was constructed after 1985, your accountant will not be permitted to assess the construction costs. ATO has recognised Quantity Surveyors as qualified to assess the right estimate of construction costs where those costs remain unidentified. Quantity Surveyors are specialists in the precise assessment of construction costs and they can maximize an investor’s financial position pertaining to their property assets. The Quantity Surveyors can also determine the tax depreciation life of your property.
Do Quantity Surveyors Need to Make an Inspection of Your Investment Property?
Site inspections have turned out to be crucial in meeting the requirements set by ATO. A professional Quantity Surveyor will make sure that all depreciable items are included and photographed. It will ensure that you do not miss out on any deductions. The documentation will then be used as proof in case of an audit.
You must remember the above things when you set out to claim allowable depreciation on rental property. If your property has been renovated, you must find out how much you have spent on the renovations. This is an obligation set by ATO. In case the previous owner carried out some renovations, you will still be able to claim depreciation. And, if the cost of renovation remains unknown, a Quantity Surveyor will be entitled to make that estimation.