Just like you can claim depreciation on a car bought for an income-generating goal, you can also claim depreciation on residential rental property. A veteran property investor will always take depreciation into consideration prior to investing in a new property. If property investors desire to enhance their savings, they must hire an expert quantity surveyor.
In this post, we are discussing some vital points related to property depreciation that you should not overlook. Let’s check them below:
Is your property way too old for claiming depreciation?
The answer is no. If your residential property was constructed after July 1985, you will be eligible to claim depreciation for both building allowance and plant & equipment. Meanwhile, if construction on your property began before this date, you will be allowed to claim depreciation only on plant & equipment.
Investors have begun to take a keen interest in property investment in Australia as it has emerged quite beneficial for them. They can effectively maximize their saving via depreciation residential rental property.
Significance of property inspection
The existing rules in Australia make site inspection essential to meet the ATO requirements. When you hire a trained quantity surveyor, he will make sure that all depreciable items are included and photographed. This will ensure that you do not miss out on significant deductions. These vital documents will then be utilized when an audit will take place. The main responsibility of quantity surveyors is to eliminate maximum disruptions to the tenant. The right time of hiring a quantity surveyor is soon after the settlement and immediately before the tenant has shifted.
Will you be eligible to claim depreciation if your property is renovated?
Yes, you will be allowed to claim depreciation for property. However, you need to find out how much you had spent on renovations. If the earlier owner finalized the renovations, you will still remain eligible to claim for the depreciation. In case you are unable to find out the renovation cost, a QS recognized by ATO will be allowed to make that assessment.
Cost of your depreciation schedule
The expenditure for preparing your tax depreciation schedule will differ. It will depend on various factors like the type of property bought, location, and finally the size. A large number of renowned Quantity Surveyors also provide a money-back guarantee to save your fee in the first year. Sometimes, they also give the report free of cost. Therefore, you do not have much to lose and, in return, you will end up gaining several deductions. Interestingly, the fees of Quantity Surveyors have emerged to be 100% tax-deductible.
Every property is unique and all factors must be considered when you prepare a depreciation schedule. You will come across many depreciation calculators to calculate depreciation for residential rental property. Some of them can be found online. It will take up to two to three weeks to complete your depreciation schedule. However, to complete your depreciation schedule in a timely manner, the QS must inspect your property at the earliest.