Property depreciation allows you claim a tax deduction for any wear and tear over time on any old or new investment property.
It allows you to claim internal items like ovens and carpets (plant and equipment) and on the construction of the building itself (building allowance) e.g. concrete and brickwork.
Quantity surveyors Washington Brown Director Tyron Hyde said it was possible to claim for both plant and equipment and building allowance costs on residential property built after 16 September 1987.
He said it was important investors used a qualified quantity surveyor to prepare depreciation reports or risk losing significant deductions.
“The Australian Taxation Office (ATO) has stipulated that if a property was built after 1985 and the costs are unknown, only quantity surveyors are properly qualified to make the appropriate estimate of construction costs,” said Hyde.
“Accountants, real estate agents, property managers and valuers are not allowed to make this estimate.
“If you try to estimate your own depreciation, or use a provider without the professional quantity surveying qualifications, you risk submitting an incomplete or poor depreciation report which will cost you a lot in deductions.
“You might also face an Australian Tax Office (ATO) if audit if the report is not deemed up to the standards required.
“The laws have changed frequently over the years and each building is unique, so it pays to get expert advice.”
According to Hyde, the cost of a depreciation schedule varies according to the type, location and size of the property however the fees are 100% tax deductible.
“As with any tax deduction, property depreciation basically reduces your taxable income,” he said.
“That means more money in your pocket to reinvest or to spend on your friends and family.”
