Organizing and Reducing the Tax Property Assets

It’s time to start getting your income tax return in order and aside from being compulsory, preparing your annual tax return is a great opportunity to take stock of how your investment is performing and to make sure you’re claiming everything you’re entitled to. If you own an income-producing property and have a taxable income in Australia, then you could minimize your taxation liability with a tax depreciation schedule. What is Tax Depreciation? Tax depreciation is an allowance for fair wear and tear on any income-producing or investment property. Tax depreciation deductions reduce an investor’s assessable income, allowing the owner to reduce the amount of taxation payable. It’s not too late to claim depreciation and deduction is based on the depreciating value of the property asset. Investors who are unsure whether they are eligible to claim deductions due the age of their property or the items within it should seek the advice of a specialist Quantity Surveyor. With the 2016-2017 financial year now over, property investors may assume they have missed their opportunity to organize a tax depreciation schedule and make a depreciation claim.

Research suggests around 80 per cent of property investors simply don’t claim because they are unaware of depreciation, they don’t know the rules, or they don’t realize they’re eligible. Legislation enforced by the Australian Taxation Office (ATO) allows investors to claim depreciation deductions on any income producing property for the wear and tear that occurs over time to the building’s structure (capital works deductions) and the plant and equipment assets contained. Both new and older properties attract depreciation. Although the ATO restricts owners of older residential properties on claiming capital works for buildings in which construction commenced prior to the 15th of September 1987, depreciation schedule of BMT tax outlines all the deductions you can claim for your property. It lasts for forty years and the fee for preparing it is 100 per cent tax deductible, depreciation of plant and equipment can be claimed for most buildings. Property owners could also be entitled to claim deductions for any recent renovations or updates made. Do you co-own a property? Then it’s usually more beneficial to order a split report to maximize the returns for each owner.

To ensure that clients who co-own investment properties are maximizing deductions, it is important that Accountants recommend their clients obtain a split report and need to be aware that the way deductions should be calculated for assets will be affected by co-ownership and are eligible for an immediate write-off and accelerated depreciation. A split report calculates each owner’s percentage of ownership of the assets within a property before applying depreciation deductions. This usually qualifies more assets for accelerated depreciation and gives the owners greater returns sooner. A specialist Quantity Surveyor can prepare a tax depreciation schedule Gold Coast at any time of year. This schedule will begin from the property’s settlement date and outline depreciation deductions over the entire depreciable life of that property (forty years). If an investor has not previously claimed or maximized the depreciation deductions available from their investment property, they can go back and amend two previous tax returns.