When you claim depreciation it will help in enhancing cash flow from the property. As per ATO rules, businesses can specify depreciation as an expenditure while reporting the income tax return for a specific period. You may refer to tax depreciation tables 2015 when you mention depreciation as an expense. The amount will help in bringing down your taxable income. All residential property and commercial property have depreciation value. The tax regulatory authority summarizes and compiles these deductions in a report known as the tax depreciation schedule.
Here are the things that you must be aware of about the tax depreciation schedule:
1. Consult with a Quantity Surveyor
When you own an investment property, you will remain eligible to claim several tax deductions. It will directly bring down your taxable income. The deductions may include council rates, management fees, accounting fees, and maintenance expenses among others. Meanwhile, the depreciation deduction is separate as it is non-cash. It implies that you are not required to spend money when you seek to claim a depreciation deduction. Many property owners end up missing it. You should consult with an expert Quantity Surveyor who will help in maximizing claims and preparing a schedule. The main motto of all property investors in Australia is to improve their tax refund as much as possible.
The depreciation schedule contains two categories namely capital works and plant & equipment. Capital works involve the property’s actual cost, structures, renovations, and extensions. It has emerged as a vital part of the schedule. Fencing, paving, and sheds including some other permanent assets are also an integral part of this category. Meanwhile, plant & equipment includes assets such as furniture, flooring, and appliances, among others. The procedure of claim includes inspection of the building and fixing a value to each asset.
3. Lease days
The ATO permits you to claim depreciation till the time property remains available for lease. If you happen to be a new owner of an investment property, you will still be allowed for a claim. In this situation, the claim will mainly depend on the number of days the property remained available for rent. When you consult with experts and accountants, it is necessary to ask about partial claims within the year and pro-data deductions depending on the lease tenure. When you lodge your tax return Australia online, some vital details will already be filled for you.
4. Previous years claim
There are times when property owners tend to miss claiming depreciation deduction for many years due to ignorance. However, now ATO permits adjustment years after the first submission. This implies that you may file an amendment application for the missed depreciation deductions.
You must be aware of the aforementioned things about your tax depreciation schedule. Soon after you improve your property, you need to hire a professional Quantity Surveyor to help you prepare a detailed claim. Your motto must be to enhance your Yield on investment property. You should not get confused between repairs and capital works improvement. It is because the claim procedure for the two remains different. This is the reason why you need to hire a professional as it will ensure that your deductions are correct.