This week I thought I’d talk about depreciating certain costs on an investment property and how it all works.
What allowances are available?
As an investor you can claim depreciation on a host of items than can include carpet, selected lighting, whitegoods, hot water installations, pool filtration to name only a few. You can also make a claim based on the construction costs of the building generating a 2.5% or 4% per anum write off benefit. A major misconception is that the property needs to be brand or near new to claim depreciation. This is not the case.
Who requires a tax depreciation report?
As soon as you purchase an investment property, setting up a tax depreciation report will allow you to claim the maximum rate as soon as possible and in the coming years. Owner occupiers can also benefit if they think their property may become a rental investment in coming years.
Can I pass on a depreciation schedule when I sell the property?
No. Prospective purchasers often like to see the current owners schedule but they must set up their own to be eligible to claim.
How do I obtain one?
Calculating depreciation is a specialised field, needing a precise understanding of replacement values and building costs. Quantity surveyors are trained in this field and find every single item that can be claimed legally. You can then take the report to your accountant who can claim your deductions.
There are numerous quantity surveyors on the coast, it’s definitely worth consideration if you are currently holding or purchasing investment property.
Until next week
Olivier