Depreciation Schedule Brisbane
In Brisbane less than 70% of property investors have a depreciation schedule for their rental property.
Yet Depreciation schedules are perhaps the most effective tax saving opportunity available to investors of any size. You don’t need to have fancy accountants with big price tags to minimise your income tax. When it comes to investment properties it’s a level playing field.
All you need is a qualified quantity surveyor – tax depreciation specialist – to prepare your property depreciation schedule.
Benefits of Depreciation
Any property investor can benefit from a quality depreciation report.
With it, you’ll be able to claim your tax depreciation entitlements under current ATO legislation.
This means bigger tax deductions and possibly even negative gearing of your property.
Here’s an example:
Lets say you have a 1970’s built unit in a highrise building in Fortitude Valley.
You paid $500,000 for it and your rent return is $500/wk
Without a depreciation report your deductions are limited to a finite list:
- Agent Fees
- Body Corp Fees
- Landlord Insurance
- Repairs & Maintenance
And that’s about all.
So, your $26,000 of rental income ($500×52) will be subject to tax (less the abovementioned deductions).
But, with a depreciation report, you can claim significantly more. Meaning much bigger tax deductions and hopefully even tax refunds.
And that may mean more cash in your back pocket.
Here’s what you may be able to claim on the same property with a tax depreciation schedule in place:
- the above list +
- Renovations to your unit carried out by yourself
- Renovations to your unit carried out by previous owners
- Renovations to common areas
- Repairs to the building (like fixing concrete cancer and lift shaft upgrades
And if you buy new items for your property you can claim them as well
- Air Con Units
And Many more items
Typically a 70’s-80’s unit will have $2,500-$4,500/yr in Capital Works tax depreciation
That’s a lot more than the deductions on week-to-week outgoings alone. Making the depreciation schedule cost rather trivial
What Is Tax Depreciation?
Tax Depreciation, or a tax depreciation schedule is essentially a list of all assets in and on your property. The ATO says property investors can claim annual deductions for the declining (depreciating) value of your assets.
That is a broad definition, but the ATO has exhaustive legislation on what you can claim and how you can claim it.
Essentially, the ATO has broken down all claimable assets into 2 categories
- Division 40 Depreciation (Plant & Equipment)
plant and equipment is the ‘easily removable’ fixtures and fittings found in and on your property.
Items like, carpet, appliances, light shades, pool pumps, etc
- Division 43 Depreciation(Capital Works)
Division 43 depreciation refers to the structural and permanent elements of your building, out buildings and landscaping. It includes items like the house, sheds, driveways, pools,painting, renovations and more
QUESTION: How to Get Your Depreciation Schedule?
Getting your property depreciation schedule is simple.
All you need do is get in touch here and I’ll send through your quote.
I’ll also provide an indicative estimate of your anticipated tax deductions based on online searches of your property
Regardless of who you choose to prepare your report, it is essential they are members of the Australian Institute of Quantity Surveyors and members of the Tax Practitioners Board.
QUESTION: What Happens After Getting a Tax Depreciation Schedule
I’ll email you a copy of your report. But importantly, I’ll also email a copy to your accountant. With it, they’ll punch in the numbers into their software programs to ensure you get the maximum tax deductions each and every year.
And don’t worry. Your tax depreciation schedule is a one-off fee. So pay once and benefit from it for the next 40-years (unless you sell earlier)
QUESTION: When to Purchase a Tax Depreciation Schedule?
The short and simple answer is: As soon as you buy your investment property.
But if you’re wanting minimise the time between paying for your depreciation report and claiming back the tax refund on your depreciation report (like you do with your accountant’s fee), then the best time is May through June.. Ensuring you pay for your report by midnight on June 30.
The downside of leaving it until June 30 is that everyone else has the same idea. So you may order and pay for your report but then have to wait 2-months for the Quantity Surveyors to get through their backlog of jobs.
and now that lots of investors go to their accountant in early July seeking a quick tax return lodgement (and refund) you may find you’ve done yourself a disservice by waiting until peak season.
So my suggestion is always, get the depreciation schedule sorted as soon as you buy the property.
Want to see some real world results
The best place to see what other investors are getting in tax depreciation deductions for properties similar to yours is by visiting our client portfolio page here
For further reading on more of our quantity surveyor articles click here
Or to visit our home page for Brisbane tax depreciation services click here
This article was written by William Callaghan A.A.I.Q.S.
2nd generation Quantity Surveyor and founder of WRC Quantity Surveying