Written by Julie George - Senior Property Manager
For property investors, it's important to understand building depreciation, as it is one of the largest tax deductions that can be claimed. Anyone who purchases a property and uses it for income-generating purposes can claim its depreciation come tax time, and it's a saving that can equate to thousands of dollars.
Before purchasing your next property investment, you can take its depreciation into consideration. In order to claim property investment depreciation on your tax return, you need to arrange for an official inspection report performed by a qualified quantity surveyor.
What is Building Depreciation?
Building depreciation is a tax break whereby investors can compensate for the decline of their investment property by claiming it against their taxable income. Depending on where you live, tax laws for property depreciation can either apply just to the property itself, or the property and its contents.
Claiming Building Depreciation on a Renovated Property
If you have renovated your property but still want to claim building depreciation, you simply have to know and be able to prove how much you or whoever did the renovations, spent on renovations.
Old Properties and Depreciation
Some people unknowingly don't make the claim because they assume their property is simply too old. If the property is built after July of 1985, you can claim Building Allowance and Plant and Equipment. If construction on the property began before July of 1985, you can claim depreciation on Plant and Equipment, but not the entire property.
According to the Australian Institute of Quantity Surveyors (AIQS), a site inspection must be performed to fulfil ATO requirements. A certified quantity surveyor will document and photograph all depreciable items. This helps ensure you are not missing out on any deductions you were unaware of and in the case of an audit, this document can be used as evidence.
Building Depreciation Claim Savings
When preparing a property depreciation schedule, there are numerous factors to consider. An online search for a 'depreciation calculator' can help guide your report, but every property is different, and the potential savings are going to fluctuate across a wide spectrum.
What You can Claim
If your residential property started construction after 1987, you can claim Capital Works deductions (buildings structure) and structural elements such as walls, bricks and fixed wiring.
Plant and Equipment can be claimed as it is classed as 'removable assets', and these include various appliances, carpets, and window coverings.
If you need more information about building depreciation, contact our team at Empire Estate Agents. We are a team of qualified and licensed professionals that offer residential sales services, strata management and property management in Perth of real estate properties and manage both large scale and small scale industrial and commercial developments.
About the author
Julie George is a Senior Property Manager at Empire Estate Agent in Victoria Park. Julie has over a decade of experience in Property Management and also more than 15 years of experience managing a successful family business, and her own property investment portfolio. Julie is known for her warm and friendly manner, honest, forward approach, winning the confidence of clients and building successful working relationships. Julie works at Empire as she wanted to work with an agency that has a fun and friendly team environment, and love’s working with the Everyday Superheroes at Empire.
Need more information or can we help you with any of your Property Investment or Management questions? Feel free to call and speak to us Empire Estate Agents to have a chat on (08) 9262 0400 or email email@example.com or www.empireestateagents.com
“Everyday heroes…going beyond”
Disclaimer The information contained on this article is intended solely to provide general guidance on matters of interest for the personal use of the reader, who accepts full responsibility for its use. The application and impact of laws can vary widely based on the specific facts involved. Given the changing nature of laws, rules and regulations there may be delays, omissions or inaccuracies in information contained on this article. Accordingly, the information on this article is provided with the understanding that the author(s) and publisher(s) are not herein engaged in rendering professional advice or services. While every attempt has been made to ensure that the information contained on this article has been obtained from reliable sources, Empire Estate Agents is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information on this article is provided "as is", with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. In no event will Empire Estate Agents, employees or agents, be liable to the reader or anyone else for any decision made or action taken in reliance on the information on this article or for a any consequential, special or similar damages, even if advised of the possibility of such damages.