More tax back, every year you own the property
The ATO understands that, as property investors, we own an asset that makes us money — but it also understands that some of the assets attached to our property decline in value each year. This means we can work out a figure for the parts that decline in value and deduct that figure from our taxable income every year.
All investment property owners want to make sure they claim 100% of their allowable tax deductions. Getting tax depreciation right could save you thousands of dollars annually, so it's not something to gamble with — it needs to be done properly by a qualified quantity surveyor.
What is depreciation?
Depreciation is the term used to describe the decline in value of an asset over the time it is used. As a property investor, you have a number of assets attached to the property itself that you can claim tax back on — from the building structure to the fixtures and fittings inside it.
What is a tax depreciation schedule?
A tax depreciation schedule — or property depreciation report — is a document that lists all the items of plant, equipment and capital costs that can depreciate over time for your new or existing investment property. Many investors are now also looking to commercial property, which likewise attracts tax depreciation.
The best part: you only need to do it once and hand it to your accountant. It provides the figures they use to make your deductions each year — for up to 40 years. Each depreciable item has its value calculated and its effective life determined, and a total depreciation allowance per year is tabulated.
The two types of depreciation deduction
Your deductions fall into two categories defined by the ATO. Capital works (Division 43) covers the structural, fixed elements of the building — the "bricks and mortar" — claimed at a set rate over 40 years. Plant & equipment (Division 40) covers the removable assets, such as carpet, blinds, ovens and air-conditioning, each with its own effective life set by the ATO.
How is depreciation calculated?
Plant & equipment can be claimed using one of two methods: the diminishing value method, which front-loads larger deductions in the earlier years, or the prime cost method, which spreads them evenly. Lower-cost items can also be grouped into a low-value pool for accelerated write-offs. Together with capital works, these deductions reduce your taxable income — improving cash flow and complementing a negative gearing strategy on your rental property. Our qualified quantity surveyors apply the right method to maximise your legitimate return.
Why should you use a tax depreciation schedule?
Because we all want to claim back as much tax as we legitimately can. If you own an investment property, you're entitled to a range of deductions as assessed by a qualified quantity surveyor. A schedule reduces your taxable income and provides a greater return from your investment. Without one, you are potentially missing out on thousands of dollars in legitimately claimable deductions each year.
Why use SJB Quantity Surveyors?
We are mum-and-dad investors, just like many of you — not a huge corporate entity, but a family-run and owned business that prides itself on taking care of our customers. We look after you at every step, making sure we maximise every cent you can claim. You won't be bulk-processed through a system; you'll enjoy our attention to detail and great value, and we'll beat any written quote.
With over 20 years' experience in the construction industry, our qualified quantity surveyors will help ensure you receive the best possible tax deduction available to maximise your investment returns. We prepare schedules in Brisbane, Sydney, Melbourne, Adelaide, Gold Coast, Newcastle, Darwin and North Queensland.