Australian investment property owners are missing out on legitimate tax savings each year because they are not fully maximising their depreciation allowances according to Tyron Hyde, director of quantity surveying firm Washington Brown.
Depreciation is one of the most important (yet often overlooked) tax saving benefits available to investment property owners. Just like you claim wear and tear on a car purchased for income producing purposes, you can also claim the depreciation of your investment property against your taxable income.
“It is surprising just how many investors are out there who really don’t fully understand depreciation and what allowances they can legally claim,” said Hyde. “The most common misconception is that only new property can be depreciated and this is simply not true.”
Say you own a 1970s house. According to Hyde, it is still worthwhile putting in a claim for depreciation because there is still value attached to the plant and equipment within the property. Items such as blinds, carpets and kitchen appliances are all deductible.
Other tax-wise tips:
Don’t fall for cheap DIY depreciation options. Only accredited quantity surveyors are trained in estimating building costs. Incorrect measurements can lead to missed deductions and poor quality reports are more likely to attract an ATO audit.
If you are planning on renovating your property get a quantity surveyor in to assess the residual value of the items before you demolish so that you can claim that value as an outright deduction off your tax.
Run your property through Washington Brown’s free online calculator to estimate whether you could maximise your tax savings further.
If you haven’t been claiming or maximising your deductions you can backdate tax returns but talk with your accountant or tax advisor
“It’s important for investors to understand that depreciation isn’t about dodging or underpaying taxes,” said Hyde. “It’s simply about getting every last cent of depreciation allowance that you are legally entitled to.”
If you require a depreciation schedule quote CLICK HERE and follow the 3 simple steps.
The above information is supplied by Washington Brown.
Disclaimer: while due care is taken, the viewpoints expressed by sponsors do not necessarily reflect the opinions of Your Investment Property.
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