Tax Depreciation Schedule
A tax depreciation schedule is a report prepared for property investors that detail the depreciable assets related to owning an investment property. A properly prepared depreciation schedule will allow you or your accountant to easily and accurately claim the maximum depreciation for your property.
As property investors most of us are aware that over time it is the value of the land component of our properties that appreciate in value. We are also aware that the building, as it gets older and is used, decreases in value. The Australian Tax Office allows you to claim this loss in value against any income that the property may generate while being rented.
This loss of value is claimed in two ways.
Capital Works (Division 43): The capital works or structural components of a rental property can be claimed at 2.5% per annum for 40 years. The Capital Works claims would include the value of all of those items that are fixed to the building and not easily removed. They would include things like concrete, bricks, windows etc.
Depreciating Assets (Division 40): The Australian Tax Office allows some items included in the property to be claimed over a shorter period of time.
These items are called depreciating assets and are recognised as those assets that can be easily removed from the property and include things like carpet, blinds, oven, dishwasher, air-conditioning etc. The claims that are calculated for the loss in value of depreciating assets is based on the Australian Taxation Office’s s recommended effective life for each item.
The combined claims for both the Division 40 & Division 43 for the average new 4 bedroom house may be between $9,500-$11,000 per year.
The goal of all property investors should be to maximise the returns on their properties. This can only be done through claiming all of the legitimately claimable expense that they incur whilst holding the property. By claiming these costs of holding a property and the depreciation on the property each year most investors would achieve significant tax savings. An investor earning $100,000 per annum would reduce their taxable income to $90,000 per annum based on the depreciation claims for an average 4 bedroom home. This would mean that the owner in this example would pay $4,000 less tax over the full financial year.
Excel Property Consultants have been providing Capital Allowance and Tax Depreciation Schedules for our valued clients for the last 20 years. Our fee is 100% tax deductible. We can be contacted on 1300 137 414. Ring for free depreciation estimate.
If you don’t have a tax depreciation schedule prepared for your investment property, you are not making the most of the tax benefits available to you. If you have a property that returns you rent, you are entitled to depreciate it. This includes houses, apartments and commercial buildings. We believe that on average less than 50% of the allowable depreciation is currently being claimed investment properties.
Maximising your rental return for an investment property can only be achieved if you are claiming the maximum depreciation on the property. This can best be done with a depreciation schedule prepared by an appropriately qualified person. Residential rental properties generally have a rental yield of around 3-5 %. This rental yield can often be lifted to 6-7% through the effective use of depreciation claims. And although this may only equate to a couple of extra percentage return, this 2% can have a significant cumulative effect over twenty years of investing.
Yes. Depreciation is an important part of maximising your return on your rental properties. The depreciation claimable for a typical small investment home could be between $9000-$11000 per annum. High-rise units generally have associated claims of between $12 000-$16 000 per annum. These figures are just an example of the claims that may be available for different types of buildings and obviously some buildings may attract much higher claims.
If you would like a general idea of the potential claims of a particular type of property please call 1300 137 414 today or contact us by e-mail.
Excel Property Consultants provide accurate, cost-effective and high-quality reports that will help you maximise the returns on your investments. We are a small office that pass on cost savings in overheads directly to our clients. Our reports are for the life of the building.
All properties are inspected, measured and analysed by fully-qualified professionals to maximize your deductions. Some companies prepare depreciation schedules from photos and other information gathered over the phone, which can leave the taxpayer in a difficult position if the claims are challenged by the Australian Taxation Office. At Excel Property Consultants, we believe that only by thoroughly inspecting the property can an accurate depreciation schedule be prepared.
The report provided by Excel Property Consultants is in an easy to understand format using both the Prime Cost and Diminishing Value methods of depreciation. The method that you choose will depend on your personal situation and this decision is often best made in consultation with your financial adviser or accountant.
The fee for the preparation of a Tax Depreciation Schedule will vary depending on the type of building and its location but reports start at $425 including G.S.T. You will receive a report that gives you a detailed breakdown of the annual amount that you can claim as the property owner off your assessable income. All fees associated with the preparation of the tax depreciation schedule are tax deductible.
Inspection of the property is coordinated with the tenant of your property either directly or often through the management agent. A suitable time is arranged for the inspection of the property at a time suitable with the tenant. The inspection of the property generally takes between 30 – 45 minutes.
The report is usually generated within 7 days from your initial contact, depending on ease of access.