Are you unaware of the
benefits of depreciation on your investment property? Don’t despair. You are
not alone and it is never too late to reap in on these benefits. Claiming depreciation is one of the most
important steps in an investor’s journey. You can even claim retrospectively, with your investment’s depreciation able
to be backdated two years. Your first port of call should be an experienced
quantity surveyor. Shop around by all means, but industry leader, Washington
Brown stands by its expertise by offering a great incentive to engage their
company. If you do not save twice the fee of their engagement, the cost of the
report will be fully refunded. And on top of this, investors who engage Cramer
Property as their Property Manager will receive a discounted report fee.
It is estimated that millions of dollars will be missed
over the coming years in tax depreciation claims due to changes in what can be
defined as plant and equipment. Laws change frequently so it is essential that
you have a report prepared by an expert in the field. If you are renovating a kitchen or bathroom in a property built after
1985 – get a quantity surveyor in before you demolish so they
can assess what the residual value of the existing items are. This residual
value can be claimed as an outright deduction and can generate huge savings in
the first year. For instance, a rental property with a
20 year-old kitchen could possibly attract an immediate deduction of around
$5,000 if removed. The added bonus is that you get to
claim depreciation on the new work once it is complete too!
A dollar today is worth more than a dollar tomorrow
so deduct items as quickly as possible. Individual items under $300 can be
written off immediately. An important thing to remember here is that provided
your portion is under $300, you can still write it off. For instance, say an
electric motor to the garage door cost an apartment block $2,000. If there are
50 units in the block, your portion is $40. You can claim that $40 outright –
as your portion is under $300. You can also try to buy items that depreciate
faster such as purchasing a microwave that costs $295 as opposed to one that
costs $320. Items between $300 and $1000 fall into the Low Pool Category and
attract a higher depreciation rate. So for instance, a $1200 television
attracts a 20% deduction whilst a $950 television deducts at 37.5% per annum.
Even properties built before 1985 (when the
building allowance kicked in) are worth depreciating. The purchase price of
your property includes the Land, Building and the Plant and Equipment. A highly
qualified quantity surveyor can help you apportion or break down the purchase
price into those categories. As an investor, you can go on the Washington Brown
website, free of charge, to get an instant estimate of the likely tax
depreciation deductions on a property before they buy it. This calculator uses
real life data collated from every inspection we do on behalf of our clients.
So the data gets more accurate with time.
Please note: Cramer Property do not have a commission or referral fee arrangement with this
company. We just believe in passing on valuable information and adding to our
service by pointing out savings to our clients where we can.
