Increasing number of individuals are investing into real estate nowadays. Such properties are generally rented to tenants for residential as well as commercial usage. Property owners usually hire a property manager to take care of their properties and manage all the tasks including rent collection, maintenance and payment of taxes.
However, other than the ongoing property management, which either you or your property manager would be doing; there is something else you should also look into. And that is investment property depreciation. This is something that will improve your bottom line and increase your income.
Experienced property investors are well aware about property depreciation and they make lucrative use of it. In fact, most of them also take investment property depreciation into consideration before making a new propertyinvestment. But don’t worry if you are new, it’s not just for the specialists. Any investment property that is meant for income-producing purposes is eligible to depreciate. The items within a building and the cost of the building itself both are entitled for depreciation against their accessible income.
All it takes is a competent quantity surveyor to inspect your building and prepare a tax depreciation report for your accountant or property manager. One thing is for sure, the savings can be substantial. Still every year, several property investors fail to claim their depreciation because they are unaware of it.
So for anyone who is unaware about the process, here’s a basic guide to understand how property depreciation works:
What is Property Depreciation?
As you might be aware that you can claim wear and tear on a car purchased for income producing purpose, similarly you can claim <a href="http://www.propertyreturns.com.au/property-investors.php">investment property depreciation</a> against your taxable income.
There are two types of allowances that can be offset against your assessable income:
Depreciation on Plant and Equipment
Depreciation on Building Allowance
Depreciation on Plant and Equipment refers that items within the building such as dishwashers, ovens, carpet, furniture, blinds etc.
Depreciation on Building Allowance refers to original construction costs of the building, including concrete and brickwork.
So, how a depreciation schedule will help you?
In simple terms, a comprehensive depreciation schedule will help you pay less tax. The amount computed through <a href="http://www.propertyreturns.com.au/self-inspect.php">tax depreciation report</a> or schedule can effectively reduce your taxable income.
What’s the age of property to be claimed for depreciation?
If your building was built after July 1985, you can claim both Plant and Equipment, and Building Allowance. If your property was constructed prior to this date, than you can only claim depreciation on Plant and Equipment. However, it will still be worth a lot. Along with that, commercial and industrial properties are also subject to depreciation, but the cut off dates vary in this case.
So, make the most out of your investment property depreciation,it’s always recommended to hire an experienced quantity surveyor to inspect your building and prepare a thorough depreciation schedule or tax depreciation report!!
Property Returns is a renowned quantity surveying firm that specialises in preparing property depreciation schedules for residential as well as commercial properties in Australia. So, contact us today for maximizing your investment property depreciation deductions.
How Property Depreciation Can Be Beneficial For Property Inv