What is tax depreciation? Tax depreciation occurs when a building gets older and items are subjected to normal wear and tear. As this happens, they depreciate in value.
The Australian Tax Office (ATO) governs legislation that allows owners of income producing property to claim a tax deduction for this wear and tear.
A tax depreciation schedule is required to maximise the depreciation claims available and to substantiate these claims in a tax return. A depreciation schedule prepared by a specialist quantity surveyor helps to ensure that you are maximising the cash return from your investment property each financial year.
Depreciation benefits vary depending on the type of building, its age, its use and its fit out. Commercial, industrial and residen- tial investment properties can all claim depreciation based on either the diminishing value or prime cost methods of depreciation.
To ensure that property owners can claim the maximum deductions each financial year, each schedule may include deduc- tions for capital works and the plant and equipment depreciating assets for the ATO specified lifetime of the property – (40 years).
Many investors throw out items without understanding that they may claim tax benefits on these materials at 100% of its written down value in the year of disposal. Investors have to undertake a depreciation report for the property as near as to the date of purchase as possible to qualify for any tax benefits.
By using a company that works directly with the ATO, you can ensure all items are properly listed in the schedule to make it simple and concise for your tax return.
Ray White Real Estate Cowra would be delighted to assist in your current or future purchases and strive to achieve the maximum return on your investment— call us today.