With the 2016-2017 financial year now over, property investors may assume they have missed their opportunity to organise a tax depreciation schedule and make a depreciation claim.
Research suggests around 80 per cent of property investors simply don’t claim because they are unaware of depreciation, they don’t know the rules or they don’t realise they’re eligible.
Legislation enforced by the Australian Taxation Office (ATO) allows investors to claim depreciation deductions on any income producing property for the wear and tear that occurs over time to the building’s structure (capital works deductions) and the plant and equipment assets contained.
Both new and older properties attract depreciation. Although the ATO restricts owners of older residential properties on claiming capital works for buildings in which construction commenced prior to the 15th of September 1987, depreciation of plant and equipment can be claimed for most buildings*. Property owners could also be entitled to claim deductions for any recent renovations or updates made.
A specialist Quantity Surveyor can prepare a tax depreciation schedule at any time of year. This schedule will begin from the property’s settlement date and outline depreciation deductions over the entire depreciable life of that property (forty years).
If an investor has not previously claimed or maximised the depreciation deductions available from their investment property they can go back and amend two previous tax returns.
*Under proposed changes outlined in draft legislation (section 2 of Treasury Laws Amendment Bill 2017), investors who exchange contracts on a second hand residential property after 7:30pm on 9th May 2017 will no longer be able to claim depreciation on plant and equipment assets. Investors who purchased prior to this date and those who purchase a brand new property will still be able to claim depreciation as they were previously. BMT Tax Depreciation will be making an official submission outlining our concerns along with suggestions of alternative methods to better resolve the Government’s integrity issue. To learn more visit www.bmtqs.com.au/budget-2017.
Investors who would like more information can contact one of the expert staff at BMT Tax Depreciation on 1300 728 726.
Article provided by BMT Tax Depreciation.
Bradley Beer (B. Con. Mgt, AAIQS, MRICS, AVAA) is the Chief Executive Officer of BMT Tax Depreciation.
Bradley joined BMT in 1998 and as such he has substantial knowledge about property investment supported by expertise in property depreciation and the construction industry.
Bradley is a regular keynote speaker and presenter covering depreciation services on television, radio, at conferences and exhibitions Australia-wide. Please contact 1300 728 726 or visit www.bmtqs.com.au