TAX DEPRECIATION SCHEDULE – EOFY TIPS | COMMERCIAL PROPERTY INVESTORS
We’re pretty sure you know the 30th of June is fast approaching! Before the end of this financial year (EOFY) has come to a close, Commercial Property Investors, make sure you have booked your appointment with Koste, Chartered Quantity Surveyors for a detailed tax depreciation schedule on your investment property.
Your tax depreciation schedule for commercial buildings and assets is to help substantiate and claim maximum deductions with the Australian Tax Office, so you can maximise your cash flow.
Depreciation is the 2nd largest deduction available, after interest, on your investment property. Don’t be one of the 80% of investors that fail to maximise the tax benefits on their investments by using property depreciation.
What is a tax depreciation schedule?
“A depreciation schedule is a report carefully prepared by a Quantity Surveyor that details the value of your building, structure and fixtures over a period of time. The schedule is used at tax time when you complete your tax return TO REDUCE your taxable income and enhance your cash flow. A depreciation schedule is a once off cost and will last for 40 years, allowing you to use this schedule each financial year, where you will be able to maximise ALL of the benefits available to you under Australian taxation law.”
Ideally you’ll order your Tax Depreciation Schedule before the 30th of June so you can claim tax deductions for the past financial year and enjoy your maximised cash flow immediately!
Koste’s Commercial Services:
- Depreciation Schedule: An initial schedule should be completed upon construction or purchase of any property. Our Quantity Surveyors identify and estimate all eligible assets, including capital works, maintenance and depreciation reports to comply with Australian Tax Office (ATO) requirements. Commercial Property depreciation is claimed under two divisions: Capital Works (division 43) and Plant & Equipment (Division 40)
- Asset Registers: A detailed asset register compiled by a Quantity Surveyor will provide you with a detailed list of assets, which will assist with compliance audits, sinking funds, asset planning and ongoing tax depreciation.
- Depreciation Management: Koste have developed CODE (Creating Optimum Depreciation Entitlements). This specialised software enables clients to manage their depreciation schedule on an annual basis to maximise deductions and tax savings. CODE will analyse modelling at asset, property and portfolio levels to incorporate asset data, including tax depreciation, capital expenditure and balancing adjustments.
- Tenant Abandonment: Our assessment identifies the eligible capital works component when a lease has expired. The fit-out will revert to the landlord if it has not been demolished.
Experts in Commercial Property Depreciation Schedules
Commercial property tax depreciation is a highly complex area. We highly recommend your tax depreciation schedule is completed by a professional that specialises in Tax Depreciation Schedules, like Koste Chartered Quantity Surveyors. Commercial property is unlike residential when we calculate tax depreciation, it requires a team of professionals that hold extensive experience in the area of commercial property in terms of legislation and estimating of commercial property.
How do you benefit from a Tax Depreciation Schedule?
‘As a commercial property investor you can claim back between 10% and 100% percent of an item’s value in the first year, it is because you could claim immediate write-off from some items. Over time items and properties wear down and decline in value and the Australian Tax Office (ATO) allows property owners to claim this fall in value as a Tax Deduction. Your Tax Depreciation schedule will have all of this information listed in an easy format so your accountant can claim on your tax return. A Tax Depreciation Schedule can improve your cash flow by thousands of dollars and will reduce the amount of tax you have to pay on a property.
What is involved for a commercial property Tax Depreciation Schedule?
Specialised Quantity Surveyors use specific industry legislation to complete a thorough onsite inspection. This includes a review of the contract of sale, inventories and lease agreements for maximum results and compliance.
Wouldn’t my accountant already know what to claim?
Accountants are not qualified to estimate depreciation costs on property. To comply with the ATO, your report should be professionally prepared by a qualified chartered quantity surveyor, like Koste. Typically, accountants can be very conservative which results in thousands of dollars lost in deductions.
Quantity Surveyors are one of the few professional groups that are recognised by the ATO as being appropriately qualified to prepare reports. If your accountant does estimate depreciation costs, the ATO may deem the calculations as non compliant, as accountants are not recognised by the ATO to prepare reports.
Why can’t I use the tax depreciation estimate that was provided when I purchased the property for my tax return?
Your tax depreciation schedule must be personalised to claim depreciation at tax time.
A Koste Tax Depreciation schedule will provide you with the maximum deductions for your property.
Do I need to purchase a new schedule each year?
No, your schedule is prepared once per commercial property or a business and usually at the time you have purchased the property, to make sure you are claiming the maximum deductions right away. However, if you do make significant changes to your property you may need to update your schedule.
New to property investing?
If you are new to commercial property investments, you can learn more about tenant abandonment, breaking leases and more by ordering a Tax Depreciation Schedule.
Ideally you will want to have your schedule completed by the 30th of June. We do highly recommend you engage the services of a Quantity Surveyor sooner rather than later to avoid disappointment of missing out on making any claims for this current tax year!
Koste can help!
If you have recently purchased your commercial property or you’re a long time investor, give Koste a call to discuss how we can help you reduce your taxable income and improve your cash flow.
To order your report or talk to one of professional advisors, give Koste Chartered Quantity Surveyors a call today.