21 Nov What is included in a depreciation schedule?
A depreciation schedule prepared by BMT Tax Depreciation helps to maximise the cash return from your investment property each financial year.
To ensure that you claim the maximum depreciation deductions, a BMT Tax Depreciation Schedule lasts for the life of the property, or forty years as specified by the Australian Taxation Office (ATO).
A BMT Tax Depreciation Schedule also provides you with a breakdown of the deductions for the two depreciable elements found in the property as explained below:
Capital works deductions (division 43)
Known as building write-off, this refers to the tax deductions available for the structural elements of a building. Examples include the foundations, walls, roof, doors, windows, sinks and tiles. In a residential property built after 15 September 1987, capital works deductions can be claimed at 2.5 per cent per year for a maximum of forty years. For commercial and other types of non-residential properties, the capital works deductions vary based on the property type, the building’s use and date of construction commencement.
Plant and equipment (division 40)
Plant and equipment assets are considered to be easily removable or mechanical in nature. These assets are identified through ATO legislation as assets which have a limited effective life and can reasonably be expected to decline in value or depreciate over the time they’re used. Depreciation for plant and equipment is calculated based on an individual effective life as allocated by the tax commissioner and updated regularly through tax rulings.
Depreciation benefits vary depending on the type of building, its age, its use and its fit out. Owners of commercial, industrial and residential investment properties can all claim depreciation. You can choose between the diminishing value or prime cost methods of depreciation when claiming depreciation for plant and equipment assets. An Accountant can provide advice on the method which best suits your individual investment strategy.
Ensuring that your depreciation claim is maximised for any building requires a combination of construction costing skills and thorough knowledge of current tax depreciation and capital works deduction legislation. For this reason, it is recommended that you speak with a specialist Quantity Surveyor before you lodge your tax return.
Completing capital allowance and tax depreciation schedules for income producing properties is a specialist field of quantity surveying and it is one in which BMT Tax Depreciation has many years of experience.
As members of the Australian Institute of Quantity Surveyors (AIQS), the Royal Institute of Chartered Surveyors, The Property Investment Professionals of Australia, the Auctioneers & Valuers Association and the Urban Development Institute of Australia as well as being registered Tax Agents with the Tax Practitioners Board (TPB), BMT remain up to date with the latest research and information to ensure deductions are maximised for all types of properties including residential, commercial, industrial, manufacturing, agricultural and more.
A BMT Tax Depreciation Schedule includes:
- A summary for both methods of depreciation to help you decide which method is best for your investment strategy
- A detailed forty year forecast, illustrating the deductions available using both the prime cost and diminishing value methods
- A glossary of terms to help you understand the terminology used
- The backing of a BMT guarantee: if we can’t find double our fee in deductions in the first full financial year claim there will be no charge for our services
- Low-value and low-cost pooling legislation is used to accelerate deductions under the diminishing value method for all plant and equipment assets
- Your schedule is pro-rata calculated for the first year of ownership to ensure you can claim even partial year deductions and don’t miss out on returns
- Your schedule includes a breakdown of common areas and common assets which can be depreciated in applicable property types, e.g. apartments, units and townhouses
- Split reports are available if your property is co-owned – discover how split reports maximise deductions
- The schedule can be provided in print, MS Excel and CSV (residential only) – just let us know what format you would prefer when you order your schedule
How do I organise a schedule?
Engaging BMT Tax Depreciation to complete a capital allowance and tax depreciation schedule for your investment property couldn’t be easier.
- Request a quote for your tax depreciation schedule
- We will collect property details, then contact your Property Manager or tenant to complete a property inspection
- Your schedule will be available within 5-7 days of all information being gathered. BMT Tax Depreciation can even forward your schedule to your Accountant directly, saving you time
- Alternatively, you can register and request a tax depreciation schedule via, MyBMT. Our handy online portal allows you to view, update and download schedules, follow the process of your schedule’s completion, to upload relevant files, photos and receipts and to share your schedule with members of your investment team
BMT Tax Depreciation also provide a free, easy to use tax depreciation calculator, which can provide you with an estimate of available deductions for any property you are considering purchasing.
Alternatively, you can contact one of our expert staff on 1300 728 726 for a free estimate of available deductions.
Article provided by BMT Tax Depreciation.
Bradley Beer (B. Con. Mgt, AAIQS, MRICS, AVAA) is the Chief Executive Officer of BMT Tax Depreciation.
Please contact 1300 728 726 or visit www.bmtqs.com.au for an Australia-wide service.