Boosting Earning Potential

Property investors can claim thousands of extra dollars on a property by maximising depreciation deductions.

According to the Managing Director of BMT Tax Depreciation, Bradley Beer, research suggests 80% of property owners are missing out on thousands of dollars in property depreciation deductions which can mean the difference between turning a negative cash flow investment into a positively geared asset.

“When looking at new apartments, an investor can generally claim an average of $14,200 in depreciation deductions in the first full year,” said Bradley.

This is no small amount, so for an investor wondering what property depreciation is and how they can go about making a claim, we’ll explain.

Depreciation is a non-cash deduction that the Australian Taxation Office (ATO) allows the owner of an investment property to claim due to the wear and tear of a building structure and its fixtures over time. It is described as a non-cash deduction because the investor does not need to spend any money to be eligible to claim it.

“All investment property owners can claim depreciation, however higher depreciation deductions are usually available on newer properties,” said Bradley.

Owners of new properties are eligible to claim the full deduction on the entire cost of the building structure over forty years. Owners of properties which are not brand new can claim the remaining years.

There is also a deduction available for the fixtures and fittings contained within the property including stoves, carpets and blinds.

“Including removable fixed assets can substantially increase the depreciation deductions available for a property investor” said Bradley.

Apartments generally contain more depreciable fixtures and fittings. Newer apartments usually contain newer fixtures which have a higher value.  This also increases the depreciation deductions that will be available for the owner.

In some states, owners of apartments can also claim a proportion of common property areas within the complex or development that are shared, such as driveways, pools, pool pumps, fire protection equipment and lifts.

It is recommended to contact a Quantity Surveyor, such as BMT Tax Depreciation, to compile a tax depreciation schedule. The Quantity Surveyor will perform a site inspection and take photos of all plant and equipment to ensure no depreciable asset is missed. They will also use their knowledge of current ATO legislation to select the best methods to calculate depreciation to maximise the claim available for the owner.

For a free over the phone assessment of the likely deductions for an investment property, please contact one of BMT’s professional staff members on 1300 728 726.

Article provided by BMT Tax Depreciation.

Bradley Beer (B. Con. Mgt, AAIQS, MRICS) is the Managing Director of BMT Tax Depreciation. 
Please contact 1300 728 726 or visit www.bmtqs.com.au for an Australia-wide service.