It is almost that time of year again, where we gather up our receipts and head to our accountants office for our annual tax return to be lodged. If you are one of the estimated 20% of Australians who own an investment property, you will also be looking at what you can and can’t claim, and how to maximise your returns.
Did you know that according to a national survey, up to 80 per cent of investors don’t claim the correct depreciation (including wear and tear on the building and for the renovations and equipment) on their investment properties and are therefore missing out on thousands of dollars in deductions each financial year?
It is now timely for investors to review their depreciation schedule if they have one, or to consider engaging a recognised quantity surveyor to prepare a new one, offering property investors real strategies to save some serious money.
Below are some depreciation guidelines as provided by Real Property Matters, who are specialised in tax depreciation;
If you have owned your investment property prior to 9th May 2017, the Australian Taxation Office allows the following areas to be assessed for depreciation;
The Building – The building needs to have been constructed after September 1987.
Structural Improvements- Improvements that have been completed after February 1992.
Plant and Equipment – Cook tops, carpets, curtains, hot water etc. either brand new or 30 years old, can be put in your depreciation schedule.
If your property is older than the above, then structural improvements which have been completed post Feb 1992 can be assessed, including kitchen and bathroom renovations, flooring, painting etc.
It is also important to not forget about Capital Gains Tax (CGT). The timing of a sale of property can regulate when you pay your capital gains tax (assuming you made a capital gain). If you finalised a contract to sell a property on 30 June, your capital gains will be calculated in addition to any other income you’ve earned and will be payable in that financial year. If it’s 1 July, capital gains tax will be incorporated into the new financial year’s accounts.