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Property investors lose out $17.5 billion annually in unclaimed tax depreciation entitlements

Australian investors could be claiming an extra $5,000 per property at tax time by following a few simple steps, according to a leading industry expert.

Mark Kilroy, director of tax depreciation quantity surveying company Koste, says the Australian Tax Office (ATO) is sitting on $17.5 billion in unclaimed tax depreciation entitlements this year alone.


“Only 40 per cent of investors are taking advantage of property tax depreciation schedules with average annual claims of just over $3,000, this is thousands lower than the average annual claims of $8,000,” says Mr Kilroy.

“Investors are simply unaware of the benefits and the thousands of dollars they could be claiming in entitlements.

“They’re missing the opportunity to reduce their taxable income, as they may be self-assessing claims or undervaluing their entitlements.”

Mr Kilroy says quantity surveyors who prepare tax depreciation schedules should actually visit the property rather than use data gatherers. Without a skilled tax depreciation surveyor, the value of assets and whether they are eligible is often overlooked.

“I always recommend using a qualified quantity surveyor to carry out the site survey and compile the report – this enables them to provide the client with detailed and accurate schedules which in turn maximises the claimable amount,” says Mr Kilroy.

Investor’s depreciation benefits vary depending on the type of building, its age, fit out and use. ATO legislation states that the owner of a residential investment property can only claim capital works deductions if construction commenced after 18 July 1985.

However, a majority of properties in Australia have had some sort of capital works carried out post 18 July 1985 and will qualify for deductions. These additions are constantly overlooked but can have a significant impact on your entitlements.

Depreciation of plant and equipment on the other hand is not limited by age, rather it is the condition and quality of each item which contributes to the depreciable amount established by a qualified quantity surveyor.

“If your property is eligible for deductions and you've never claimed depreciation, you could be entitled to a substantial back claim,” says Mr Kilroy.

“For example, one of my clients who’d never claimed depreciation on a newly built $450,000 property claimed upward of $14,000 in the first year and an average of $9,500 every year thereafter.

“Koste quantity surveyors identify and value capital and structural works carried out post original construction, and possess detailed knowledge of the current legislation surrounding plant and equipment to maximise tax depreciation for clients.”

The preparation of a tax depreciation schedule should be carried out by a qualified quantity surveyor who has the expertise to calculate building construction costs. Tax rulings clearly state that valuers, real estate agents, accountants and solicitors do not have the expertise to make such an estimate of costs.

Mr Kilroy says all Koste surveyors are qualified quantity surveyors who specialise in tax depreciation schedules for both residential and commercial clients Australia wide.

For more information visit www.koste.com.au.