Many Australians have started choosing to invest in apartments and smaller units as a part of their property investment portfolio. There are many reasons why it is a preferred option for many, like lower cost of purchase, less maintenance cost, and constant rental income. One more attraction now is tax depreciation on investment property. These days, micro-apartments are a fad because of their lower investment costs, lower construction costs, self-contained assets, budget-friendly for working class, and lower rental costs. The micro property owners also get to claim depreciation from their taxable income when calculating income or loss from a property.
Property Depreciation Schedule
You cannot just post an amount for depreciation while paying your taxes. For a property investor, depreciation is typically the largest tax deduction every year. However, these taxes need to be filed along with a depreciation schedule. Depreciation schedules for rental property ensure the maximisation of tax deductions. A rental property depreciation schedule is prepared by a quantity surveyor and has a detailed structure that states the claimable deductions clearly for the annual depreciation of the investment property. The properly made depreciation schedule includes construction costs, renovation costs, assets, and even forecasted deductions for the upcoming year. Your accountant cannot prepare this schedule though. You will need to hire an ATO approved quantity surveyor who can estimate the historical as well as current property costs along with the included assets.
How to Claim Depreciation on the Investment Property?
For claiming depreciation on investment property, you need to send this depreciation schedule made by the quantity surveyor to your accountant. The accountant will apply these results to your tax return calculations for that year and for all the other years to come. If you do not file your tax returns with the help of an accountant, then you can apply this schedule to your tax return calculations too. The depreciation, however, is calculated by two different methods. Therefore, if you choose to file the returns yourself, then you need to remember that you have to choose one method of depreciation calculation. Additionally, you have to stick to that particular method for all the years to follow. The calculation method of depreciation cannot be changed while filing tax returns in the future. Whether your investment property is commercial or a residential structure, the system remains the same. Even for micro-apartments, you need to get the schedule made and then applied to your tax return calculations.
A good quality depreciation schedule and a cheap one can make a substantial difference in your payable tax amount. The cost difference between getting a proper schedule made and a cheaper one is minimal but it can make a huge difference in your tax amount that you pay every year. An expensive report will be far more convenient and generate great results for your investments. This is where Deppro Perth comes in. We would suggest that you chose who represents you with quality and value in mind. We can provide you your money’s worth and save a lot on your miscalculated tax losses.