TAX DEPRECIATION SCHEDULE – EOFY TIPS | RESIDENTIAL 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, Residential 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 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 Residential Services:
- 40 year summary: Our report includes a comprehensive 40 year schedule highlighting all depreciable plant & equipment and capital works.
- Onsite Inspections: Our qualified Quantity Surveyor will carry out the site inspections both virtually and physically.
- Detailed Report: We utilise the current ATO Tax legislation, which changes annually to prepare your report for your property, ensuring you receive maximum benefits and returns.
- Value for Money: As our valued Platinum Package client, we update your schedule free of charge, whilst you are the owner of the property. We guarantee that you receive 2 x your fee back in your 1st year of deductions.
Your schedule will be split into 2 classifications: Capital Works and Plants & Equipment. Capital Works include the original cost of the property, extensions or renovations and structures. Plants & Equipment are non permanent removable assets like; appliances, carpets, flooring. Your Tax Depreciation schedule will summarise all of this information into one report identifying the value of each part of your property and how much it has depreciated. This report is then available to use at tax time to complete your claim.
We highly recommend your tax depreciation schedule is completed by a professional that specialises in Tax Depreciation Schedules, like Koste Chartered Quantity Surveyors .
How do you benefit from a Tax Depreciation Schedule?
As a residential property investor you can claim back between 10 and 40 percent of an item’s value. 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.
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 with a tax agent license, 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. Koste has assisted clients to update their report from the previous owner. 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 investment property 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, such as renovations or repairs to your property you may need to update your schedule.
New to property investing?
If you haven’t realised the potential savings you can achieve from a Tax Depreciation Schedule and you have only just recently purchased your investment property, the ATO will allow you to adjust your tax return for up to 2 financial years.
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 residential investment property or even if you have been 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.