Property depreciation deductions can make a significant difference to a property owner’s cash flow.
The Australian Taxation Office (ATO) allows property owners to claim depreciation, or decline in value, as a deduction. As a non-cash deduction, depreciation is often overlooked. With tax time approaching, property owners should ensure they are claiming all deductions to which they are entitled.
Owners of income-producing properties can claim depreciation deductions related to the building’s structure as well as the plant and equipment assets within the property.
Capital Works Deductions (Building Structure)
Depreciation related to a building’s structure can be claimed via capital works deduction. As a general rule:
Residential homes constructed after 15 September 1987 are eligible.
Commercial properties constructed after 20 July 1982 are eligible.
Plant & Equipment Depreciation (Fixtures and Fittings)
Depreciation can also be claimed on each plant and equipment item, or fixtures and fittings within a building, including items such as hot water systems, carpets, and blinds.
Generally, newer properties with newer fixtures and higher construction costs attract higher depreciation deductions, but older properties still offer depreciation opportunities. It’s always worth enquiring about the deductions available on an investment property.
To maximise depreciation deductions, property investors should engage a specialised Quantity Surveyor to complete a tax depreciation schedule. The schedule has a one-off cost which lasts the life of the property and ensures the property owner claims their full deduction entitlements. The fee for a tax depreciation schedule is 100% tax deductible.
Call us today on 07 5476 6547 and we can arrange a depreciation report on your behalf.