Many property investors fail to maximise their investment property deductions by not claiming the correct amount of depreciation. If you own an investment property, it is never too late to start a bit of tax planning to make sure you get the maximum tax deduction possible, you would be foolish to pay more tax than you have to!
Something often overlooked by property investors is a property tax depreciation schedule. Depreciation is a ‘non-cash’ expense that represents the decline in value of an asset due to its use over time. Being a ‘non-cash’ expense means that you have not physically put your hand in your pocket and spent any money, however the wear and tear on items of plant associated with your rental property is recognized as a legitimate tax deduction. Property investors can depreciate such things as carpet, kitchen cupboards, air conditioners and so on.
Deductions for property investors
In order to correctly claim the maximum deduction you are entitled to it is best to enlist the services of a qualified Quantity Surveyor. For a minimal fee, they will visit your rental property and list all items of plant with an estimate of its value and the relevant depreciation amount claimable in the current and each subsequent tax year.
Another advantage of having this schedule is that if you were to renovate your investment property you would have a written down value associated with each item you were renovating. For property investors this cost could be written off, giving you a tax deduction you may otherwise have missed out on. To find out more you should speak to your accountant or tax adviser.