One of the largest tax reductions you can declare, property depreciation, is suprisingly overlooked by a large number of Fremantle property owners.
Making a claim for property depreciation on your investment property and the items within it could assist you to substantially increase financial benefit of owning an investment property.
Property depreciation is a tax deduction you can access based on the decline in value of your property. As your residential property’s. The document required to be elegible for this dedcution is called a ‘tax depreciation schedule’
Investors may be qualified for 2 different types of depreciation:
Capital works deductions:
This applies for property constructed after 15th September 1987, allowing individuals to be able to claim depreciation for the structure’s framework. This relates to the core structure and relevant items such as bricks, wall surfaces and also includes electrical wiring throughout the property.
Plant and equipment deductions:
Regardless of when your Fremantle investment property was constructed, you can apply a tax deduction for the decline in value of chattels such as carpets, blinds, dishwashing machines as well as ovens. The reduction you get will be based on the effective life of the asset, as set out on the Australian Tax Office web site.
In order to claim depreciation, a qualified quantity and land surveyor will need to prepare a tax depreciation schedule for your Fremantle investment property. The surveyor will visit and evaluate your residential or commercial property to approximate building costs and also carry out an online examination to gather evidence of the chattels within your home. The resulting property depreciation report will reveal to you what you will be able to declare for the remainder of the forty year life of the asset. If you have any records or information pertaining to recent renovations and enhancements (such as costs and dates the renovations were performed), this will ultimately help the property surveyors create an accurate depreciation schedule. Nonetheless, they will be able to inspect the home for indications of enhancements that have occured should you not have these details at hand.
Many investors lose out on residential property depreciation as a result of the presumption they are not able to claim depreciation on older homes. Nevertheless, this isn’t strictly true. While only owners of buildings created after the 15th September 1987 are qualified to apply works deductions, these limitations do not apply to plant and equipment deductions. Even if your Fremantle property was developed prior to 1987, you might still have the ability to claim any renovations or enhancements made after this day as tax deductions. Whilst some property investors are able to claim depreciation for renovations and also enhancements made by previous proprietors, legislation was recently changed to state that any investors who have bought a second-hand home after 9th May 2017 are no longer able to claim depreciation for plant and equiptment they haven’t paid for themselves.
If your Fremantle residential property has gone through any type of remodellings or renovations, you ought to arrange another site evaluation with a quantity surveyor so they can re-assess the deductions readily available from these changes. If work isn’t yet in progress, you must have a site examination carried out both prior to as well as after the renovations, as you may have the ability to claim further deductions for the depreciable worth of the properties you remove throughout the renovation process.
Whether you need aid maximising the return of your Fremantle investments or just don’t have time to handle your rental property on a day-to-day basis, the Fremantle residential property management team at dethridgeGROVES can provide the guidance and solutions you need to make the most out of your Fremantle residential investment properties.
A full guide to Rental Properties from the Australian Tax Office is available at the following link
https://www.ato.gov.au/uploadedFiles/Content/IND/downloads/Rental-properties-2020.pdf
For additional information regarding our property management options, get in touch with our Fremantle based property management team on 08 9336 1166 or email Dimitri Oikonomou at dimitri@dgre.com.au
Disclaimer: Whilst this information has been collected from numerous industry sources, be aware that these are the views of dethridgeGROVES Real Estate only and do not form financial advice. Please contact a tax professional when organising your tax depreciation schedule.
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