Tax Depreciation – Tax Depreciation Schedules

Info Video on Claiming Depreciation and Building Deductions

Call Australian Valuers on 1800 664 094 – Property Valuers for Brisbane, Ipswich, Sunshine Coast, Gold Coast, and Northern NSW including Newcastle and Byron Bay.

Tax Depreciation – Tax Depreciation Schedules

How a Tax Depreciation Schedule Will Help Lower Your Taxes Considerably

What is a Tax Depreciation Schedule?

Under current legislation in Australia, if you purchase an asset for the sole purpose of earning a living, you are allowed to claim deductions against your taxable income.

If you’re a property investor, a Tax Depreciation Schedule details the depreciation of your investment property, informing your accountant of the amount to claim.

Minimizing Your Tax

Probably the easiest (and often neglected) way to minimise your tax is through a Tax Depreciation Schedule, where it’s not uncommon for us to see an investor better off by at least $20k over the life of their investment loan.

Many people are under the misconception that depreciation is only claimable on new properties and this is simply not true.

By reducing your taxable income, we can help you create a greater return on your investment.

How Does a Tax Depreciation Schedule Improve Your Tax/Cash Flow?

1. Rules for Capital Costs
Capital costs or construction costs is the cost to build, extend or renovate a building. This doesn’t include the cost of the land or soft landscaping.

Rates of depreciation are determined by:

  • Type of construction
  • The year the construction was made

Put simply, any construction that was built after 18th July 1985 can be depreciated at 2.5% (or in some cases – 4% if the construction was carried out in a certain time frame).

2. Rules for Plant and Equipment

This include items like:

  • Stove
  • Curtains
  • Carpets or floors

The effective life of any depreciable asset is the length of time (in years) the asset can be used to help you produce an income.

3. Case Study
See below the impact a tax depreciation schedule can have.

Person with Tax Depreciation Schedule Vs Person without

Did Claim Depreciation Didn’t Claim Depreciation
Income
Wage Income $70,000 $70,000
Tax Paid $14,297 $14,297
Rental Income $30,000 $30,000
TOTAL INCOME $100,000 $100,000
Tax Deductions
Interest $22,000 $22,000
Repairs $1,000 $1,000
Rates $2,000 $2,000
Insurance $1,000 $1,000
Depreciation  $11,000
TOTAL DEDUCTIONS $37,000 $26,000
Taxable Income $63,000 $74,000
Tax on Taxable Income $12,022 $15,597
REFUND Refund of $2,269 Owes an additional $1,300 in tax

Result
In the above example, the person that did a tax depreciation schedule, benefitted by $3,569 in the pocket.

Imagine the effect of this over 10 years?

The easiest way to help you understand this is:

  • REPAIRS – are immediate tax deduction
  • IMPROVEMENTS – are depreciable over time

Contact Australian Valuers

As a property investor, you want to maximize your return, improve your cash flow and minimise your tax. By having Australian Valuers complete a Tax Depreciation Schedule for you, we know we can reduce your taxable income.

To order a Tax Depreciation Schedule or to find out more about our services contact Australian Valuers on 1800 664 094, or email at admin@australianvaluers.com.au.

We also offer a minimum claim guarantee to ensure that the report is worth your while. IF YOU DON’T GET BACK DOUBLE YOUR FEE IN YEAR 1  – YOU GET A FULL REFUND.