According to quantity surveyors BMT, investors are likely to ignore the backyard when formulating depreciation deductions and in doing so are likely missing out on thousands of dollars they should be claiming.
“There is a common misconception that depreciable items are only limited to what is inside your investment property,” BMT chief executive officer said Bradley Beer.
“Outdoor areas can often be overlooked and with tax time fast approaching, it’s an ideal time for property investors and their advisors to ensure they are claiming all the legitimate tax deductions that these areas may hold,” Beer said.
Items such as fencing, garden sheds, outdoor patios, in-ground pools and clotheslines are some of the common items that can be depreciated and are often missed by investors.
“One of the most valuable outdoor assets is the in-ground pool, as it can attract a first year tax deduction of up to $1,375 as well as the possibility of additional deductions of around $583 for associated filtration and chlorination systems,” Beer said.
“If your pool is complemented by a freestanding spa, the first year deductions alone can amount to around $882.”
According to Beer, freestanding outdoor barbecues could attract first year deductions of around $1,478, while outdoor furniture could attract around $800 worth of deductions and solar lights could attract around $250 worth.
The humble wheelie bin can valued at approximately $300 and can qualify as an immediate write-off, meaning the total value can be claimed as a first year deduction.
For those who have recently done some backyard maintenance there may be even more deductions to claim.
“If you have recently renovated your backyard, take note of possible structural deductions as you may be able to claim 100 per cent of the items you have removed and replaced, such as retaining walls, garden sheds and driveways,” Beer said.
“As your tenants enjoy the outdoor areas of your property, it may pay to remember that you can as well by unearthing the tax savings these areas may hold.”
Beer claims its investors who rely on DIY depreciation schedules who are more likely to miss out on the backyard deductions, which may go a long way to explaining why those who go it alone are likely to miss out on thousands of dollars’ worth of deductions at tax time each year.