How important is your investment property depreciation?

Depreciation is a valuable asset at tax time, aiding your financial bottom line. Just as wear and tear on a car used for generating income can be claimed, so too can the depreciation of your investment property against taxable income.

Experienced property investors are well-versed in this strategy, often factoring depreciation into their investment decisions. However, it's not exclusive to seasoned investors; anyone acquiring property for income purposes can leverage depreciation benefits.

Yet, many remain unaware, resulting in thousands of unclaimed dollars annually. To capitalize on significant savings, property investors simply need to engage a qualified quantity surveyor to assess their property and prepare a report for their accountant.

Can I claim depreciation on all investment properties?

Depreciation claims vary based on construction dates:

• Properties built before July 18, 1985: Only Plant and Equipment depreciation can be claimed.

• Properties built between July 18, 1985, and February 26, 1992: Both Building Allowance and Plant and Equipment can be claimed.

• Renovated properties: Depreciation can be claimed if renovations occurred after February 1985, even if undertaken by previous owners.

• Brand new and substantially renovated properties: Deductions can be claimed for depreciating assets within the property.

How do I get a depreciation schedule?

For properties built after 1985, only quantity surveyors can estimate construction costs, a requirement for depreciation schedules. These professionals ensure accurate measurements and reliable figures for tax depreciation schedules.

Site inspections are necessary for ATO compliance. Quantity surveyors document all depreciable items, liaising with tenants or property managers to minimize disruption.

What are the costs and timeline?

Costs vary depending on property type, location, and size. Most leading quantity surveyors offer money-back guarantees or free reports, and their fees are fully tax deductible.

Typically, a depreciation schedule takes 2-3 weeks to complete, provided the property inspection proceeds promptly.’

How much will I save?

Savings vary based on property specifics. Numerous depreciation calculators are available online, often free of charge, aiding in estimations.

Remember, property depreciation is a valuable tool for optimizing tax benefits and maximizing returns on investment properties.

Written by Eric Mai -

Property Manager & Business Development Manager