5 Most Common Depreciation Questions about Investment Properties

There are distinct advantages as well as disadvantages when you invest in a property. As a property investor, you have counted in all the deductions before, as this might lower your taxable income and make owning an investment property more viable. While you might be familiar with some of the basics, you may not be aware of how residential rental property can impact your tax as you need to know how much is allowable depreciation on rental property?

So, here are a few questions that are frequently asked about property depreciation:

What is a Depreciation Schedule?

A depreciation schedule is an extensive report that charts the loss or depreciation deductions assert by an investment property owner on his building structure and its fixtures and fittings. A depreciation schedule that is prepared by a specialist firm is one of the best ways to maximize the cash return from your investment property each year. You can also go through the rental property depreciation report as per your interest.

If My Property is Second Hand, Can I Still Claim Depreciation on It?

Now there are certain rules and regulations for what can be or cannot be claimed around second-hand property. You have to know that there are two types of depreciation (plant and equipment and capital work). For plant and equipment before 9th may 2017, if you buy a property and rent it out, you can always claim for depreciation even if it is second hand. But if signed a contract after 9th may 2017, you can no longer claim on second-hand plant and equipment for residential property owners.

Can I Claim Any Depreciation on Buildings That Are Rebuilt?

Yes. If you are scrapping or demolishing any property and if it is still depreciable then you can claim on a rebuilt property. You will be able to declare depreciation from the time of knockdown. This will include both plant and equipment and as well as capital works.

Is It Necessary to Do a Depreciation Schedule With the Legislation Change?

Let me remind you that even if you have purchased the property before 9th May 2017, you can still buy a depreciation schedule. You need to check out the tax depreciation schedule for rental property to get the hang of all the things that need to be done.

I Haven’t Done a Tax Depreciation Schedule Earlier, Can It Be Backdated?

There are some rules to back claiming any tax deductions but yes you can still do it. As a taxpayer, you can only modify your tax return for the last two years from the time you receive notice of assessment. If you want to go further back, you can do this by raising a question with the ATO. You can claim tax deductions that were missed.

Bottom Line

When going for any investment or you already have one, make sure you clear all your doubts by taking the help of quantity surveyor tax depreciation as they are qualified under tax legislation to estimate construction costs for depreciation purposes. Your accountant can provide better guidance and proper insights.

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