Depreciation is essentially the estimated decrease in a property’s value over time. As a building gets older, items wear out and “depreciate”. This depreciation can be claimed back as a tax deduction.
One of the common misconceptions with depreciation is that it is only available on newer properties, however while depreciation benefits are likely to be greater on newer properties, they are available no matter how old a property is.
It is well worth investigating the depreciation benefits on any property, and you might even be able to make adjustments on your previous two tax returns if you haven’t already been maximising your tax benefits.
All you need to do is get a Quantity Surveyor to inspect your property and they will prepare a Tax Depreciation Schedule for your accountant to use.
It could cost upwards of $600.00 to get a Tax Depreciation Schedule done, however the tax savings in the first year normally far exceed this and the schedule is normally good for a number of years. Plus a Quantity Surveyor’s fees are tax deductible.
There are substantial savings to be made with property depreciation. The amount written on your property’s depreciation schedule is effectively what you can claim back on your taxable income.
There are a number of depreciation calculators available online if you would like an idea of that amount you might be able to save. Simply Google “depreciation calculator” and try out the different free calculators available.
Property investors that don’t use a depreciation schedule could potentially be missing out on thousands and thousands of dollars every year.
Before tax time this year, go and see a Quantity Surveyor to get a Tax Depreciation Schedule done. Remember, benefits are available on most properties so if you own an investment property then you are likely to benefit.
Feel free to get in touch with the Arbee Real Estate for recommendations on local Quantity Surveyors.