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Dear Fellow Property Investor,
Did you know that Tax depreciation is the key to increasing cash flow on your investment property?
Every residential property investor should have a tax depreciation schedule to substantiate and claim maximum deductions.
As the owner of a residential investment property, claiming depreciation deductions can make a big difference to your cash flow.
Of all the tax deductions available to property investors, depreciation is the second largest deduction available after interest.
Both new, and old residential investment properties have substantial depreciable value. On average, BMT finds residential investors an average of over $11,000 in deductions in the first full financial year, and more than forty thousand dollars, in the first five years.
What is tax depreciation?
Tax depreciation is a tax deduction claimed for the natural wear and tear of an income-producing building and its assets over time. It is generally the second biggest tax deduction for property investors, after interest.
Who can claim?
Tax depreciation deductions are available for both residential investment properties and commercial buildings. Most properties, new and old, have depreciation available.
What can you claim?
You don’t need to spend money to claim tax depreciation. Tax depreciation deductions are split into two categories:
Division 43: Capital works deductions
Capital works deductions (division 43) refer to the building’s structure and items that are permanently fixed to the property such as kitchen cupboards, doors and sinks.
Capital works typically make up between 85-90% of the total claim.
There are different rates of depreciation available for different properties based on their type, industry and construction commencement date.
Division 40: Plant and equipment depreciation
Plant and equipment assets (division 40) are items which are easily removable from the property, like carpet and blinds. These assets have a limited effective life as set out by the ATO and can generally be depreciated over time. Investors can claim depreciation deductions for more than 6,000 different ATO recognised plant and equipment assets.
There are some restrictions to claiming depreciation on previously used plant and equipment found in second-hand residential properties as legislation changed in May 2017.
How do I claim depreciation?
A tax depreciation schedule prepared by a specialist quantity surveyor like BMT Tax Depreciation is the best way to substantiate your tax depreciation claim with the ATO.A comprehensive tax depreciation schedule prepared by BMT Tax Depreciation will help you claim all available depreciation tax deductions for the effective life of your investment property.
For a Quote, simply call BMT on 1300 728 726 or online at www.BMTQS.com.au