As assets are depreciated over periods up to 40 years, the chances are you will have residual value in the assets that can be written off at 100% as a loss by calculating a balancing adjustment.
The value of a write-off is calculated by comparing the sale value (if any) with the written down value (Original Value less depreciation). If the sale price is more than the written down value, you need to declare it as income in your tax return.
However, if this figure is less, which is the majority of cases, you can claim the difference as a loss in your tax return.
Remember, you are unable to write-off assets which are held in the low value pool.
You should carefully consider whether to use low value pooling, if you believe any of the circumstances stated may occur.
Having specialised in Tax Depreciation for more than 20 years, we have found this deduction to be the most commonly missed or overlooked by property investors.
Koste has worked with both large superannuation funds and residential investors who are both entitled to claim deductions on assets that do not exist anymore. As part of our service, we work with our clients on a long-term basis to educate them on the benefits of managing depreciation schedules throughout the ownership life to maximise deductions including valuable write-off deductions.
If you have already removed or replaced an asset without engaging a Quantity Surveyor, it is still possible to complete a review from historical photos and local council databases to calculate possible depreciation benefits.