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Save You Thousands of Dollars with Tax Depreciation Schedule
Are you a property investor? Did you know that under Australian Taxation Office (ATO) legislation, you are allowed claim depreciation from your investment property?
If this information is new to you, you are not alone. Many property investors, particularly “mum and dad” investors, do not fully understand how claiming depreciation can potentially save them thousands of dollars each financial year.
This article looks at depreciation in more depth and why getting a tax depreciation schedule should be at the top of any investor’s to-do list.
What is a Tax Depreciation Schedule?
All assets are deemed to have a limited lifespan, so this means that they will decline in value over time.
A Tax Depreciation Schedule is a comprehensive report that lists all assets that are eligible for depreciation within your investment property.
What Can I Depreciate?
Depreciation for investment properties is divided into two categories, namely capital allowances and plant and equipment.
1. Capital Allowances
Capital allowances are related to the construction costs of the building and are based on the historical construction cost of the property.
2. Plant and Equipment
Plant and equipment encompasses all fittings and fixtures within the house such as lights, flooring, window furnishings and hot water systems.
How is Depreciation Calculated?
There are two different methods of calculating depreciation. Diminishing value tends to be more aggressive in the first few years and prime cost maintains a more constant level of depreciation.
The ATO has a calculator, which compares the results of the two methods.
What Properties Are Eligible for a Tax Depreciation Schedule?
Any type of property be it residential, commercial, or rural, that generates an assessable income, is eligible to have a tax depreciation schedule done.
Most importantly, owners of both new and older properties can benefit from depreciation deductions.
When Should I Get One?
The best time to get a Tax Depreciation Schedule done is as soon as you purchase the property or when the property starts to generate an assessable income.
However, even if you purchased your investment property several years ago and didn’t get a Tax Depreciation Schedule done immediately, it is not too late. Some deductions can be applied up to two years retrospectively and the schedule will show 40 years of depreciation values.
What are the Benefits of a Tax Depreciation Schedule?
Basically, depreciating your assets will mean extra money in your pocket!
By depreciating assets, you will reduce your taxable income, in turn reducing the amount of tax you need to pay.
What Does a Tax Depreciation Schedule Cost?
$695 including GST. This fee is also tax deductible.
The Australian Valuers’ Guarantee
Australian Valuers promise that if completing a tax depreciation schedule doesn’t save you at least twice your fee in the first year, they will refund your initial fee.
How Do I Book a Tax Depreciation Schedule?
Book your Tax Depreciation Schedule with Australian Valuers before July 1, 2019 to and get an Investor’s Market Report FREE (valued at $300).
Book a Tax Depreciation Schedule now and get an Investor’s Market Report FREE (valued at $300).
“Depreciation and capital expenses and allowances” . Website. Australian Government – Australian Taxation Office. 24 Apr 2018. Retrieved 28 Jun 2018.
Editor’s Note: This post was originally published July, 2018 and has been updated with the lasted offer for 2019.