Aussie investors miss out on tax depreciation entitlements

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Aussie investors looking for easy savings might want to start with their tax.

In fact, the Australian Tax Office is sitting on a whopping $17.5 billion in unclaimed tax depreciation entitlements this year alone, says Mark Kilroy, the director of Koste.

He argues that if Australian investors followed a few basic steps that they are probably unaware of, they would be able to claim about an extra $5,000 per property at tax time.

“Only 40 per cent of investors are taking advantage of property tax depreciation schedules with average annual claims of just over $3,000 – this is thousands lower than the average annual claims of $8,000,” he says.

A major factor is having quantity surveyors who prepare tax depreciation schedules actually visit the property, as opposed to using data gatherers.

Without a skilled tax depreciation surveyor, Kilroy believes that the value of assets and whether they are eligible is often overlooked.

“I always recommend using a qualified quantity surveyor to carry out the site survey and compile the report – this enables them to provide the client with detailed and accurate schedules which in turn maximises the claimable amount.”

Tax rulings clearly state that valuers, real estate agents, accountants and solicitors do not have the expertise to make an estimate of building construction costs, says Kilroy.

It is the type of building, its age, fit out and use which determines an investor’s depreciation benefits.

Even though ATO legislation states that the owner of a residential investment property can only claim capital works deductions if construction commenced after 18 July 1985, a majority of Australian properties have had some sort of capital works carried out after this date, and will therefore qualify for deductions.

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