The concept of investment property depreciation schedule refers to the synopsis or the summary of the tax deductions a person can claim on the depreciation accrued on his/her investment property. This depreciation is applicable to structural elements such as concrete slab, brick, floor plan, and ceiling as well as on “plant and equipment” elements. Under the depreciation, elements like blinds, built-in oven, ceiling fans, etc. are also included. Each of these depreciable components are evaluated to ascertain the claim that can be made against their depreciation. Claiming depreciation on property is highly beneficial, read below to understand how.
What’s the Need for a Depreciation Schedule?
The most basic yet most crucial benefit of claiming property tax depreciation is that the property gets tax benefits. Claiming the accrued depreciation on the investment property lowers the yearly taxable income which in turn reduces the tax bill.
An investment property depreciation schedule navigates all the deduction one can achieve for a period of 40 years. What this does is show the accurate picture of saving that one can achieve using the depreciation schedule.
How to Employ the Investment Property Depreciation Schedule?
In order to obtain the benefits of property tax depreciation, one needs to get in touch with a Quantity Surveyor. A registered Quantity Surveyor is the only who can draft a formal depreciation schedule which will entail all the necessary details and will be in sync with the ATO rules.
A Quantity Surveyor is responsible for inspecting your property and chalking out all the depreciable items. On top of that, they undergo required researches by means of property agents, local council, or strata managers. This allows the Surveyors to map the full picture of the investment property. With the help of this elaborate information, the investors will attain the full benefits of claiming depreciation on the property.
Some Additional Tips for Using the Investment Property Depreciation Schedule
The task of getting your investment property depreciation schedule can be strenuous and hence these add-on tips will be beneficial:
- It is suggested that the Quantity Surveyor works in coherence with the investor’s accountant in order to ensure accuracy and prevent duplication of efforts.
- Claiming the cost of preparing the schedule must also be made.
- The best time to have the property depreciation report drafted is right after achieving settlement and before any new tenant starts renting the investment property. This allows the Quantity Surveyor to assess the property without any window-dressing and hence saves the investor with the effort of inspection times with the tenant.
- Knowing the rules regarding the topic of age-old properties is also crucial. Structural and plant depreciation can be claimed on all those properties which are built after 1987. While, the properties that were built before 1985 will get plan and equipment depreciation. Depreciation on previous owner’s refurbishment is also a possibility.
Don’t put off the drafting of an investment property depreciation schedule. The efforts may be very cumbersome but it is one investment that will pay itself off and also secure a lot of your money throughout your investment’s life-cycle.