A Tax Depreciation blog by Paul Bennion.
It is an unfortunate fact that too many tax payers in Australia who own investment properties still miss on out generous tax depreciation benefits they can legitimately claim.
The latest figures from the ATO show during the 2013/2014 financial year individual tax payers received $33.3 billion in tax deductions.
“The individual taxpayers who collectively received this $33.3 billion in tax deductions qualified for these refunds by using legitimate tax deductions. For example, individuals collectively were able to deduct $20.7 billion for work related expenses during 2013/2014.
DEPPRO believes these overall deductions would be even higher if more property investors understood the financial advantages of tax depreciation and fully claimed these benefits using the services of a professional tax depreciation company.
For example, most Australian property investors do not realize that tax benefits obtained through depreciation can be equivalent to 60% of the total purchase price of the property. That’s means potential tax benefits of $300,000, for example, on a property purchased for $500,000.
A large proportion of these tax benefits are never claimed which means that each year hundreds of millions of dollars in tax benefits are lost every year by investors not claiming their legitimate entitlements.
Over the coming months, record low interest rates will encourage more investors to buy investment properties especially in more affordable capital cities such as Brisbane and Perth.
Both our offices in Brisbane and Perth has already seen evidence of this growing interest by investors in both these capital real estate markets with the number of our tax depreciation reports for both cities significantly up compared to this time last year.
High income earners, in particular have been very active in these markets as they can buy real estate at very competitive prices while at the same time to reduce their taxable income through claiming tax depreciation benefits.
If you buy an investment property, it is important to complete a tax depreciation schedule as soon as possible after settlement so that it complies with ATO guidelines.
For the initial cost of a tax depreciation report – which is tax deductible – by legitimately claiming their full depreciation allowances clients can achieve thousands of dollars in tax benefits each year from their investment. Even an older style home can also qualify for substantial tax depreciation benefits if a depreciation schedule is undertaken around the time of settlement.
To protect their interests and ensure the depreciation report is fully compliant with ATO rulings, property investors should select a company, that is a member of the Australian Institute of Quantity Surveyors (AIQS) and uses systems that are fully compliant with ATO rulings
