The property depreciation time is ticking
The property depreciation time is ticking
Do you own an investment property? If so, have you considered having a quantity surveyor report completed to increase your tax return? Let’s show you how you can claim depreciation on your investment property this tax season.
Benefits of Tax Depreciation specialist
Firstly, utilizing a tax deprecation specialist such as BMT will help you maintain any detailed knowledge of all the current depreciation ATO Tax Rulings. By making an appointment with any of BMT’s tax depreciation specialists, they will help you create a depreciation schedule. The depreciation schedule will assist you in paying less tax. The amount the depreciation schedule states you claim reduces your taxable income.
How does this affect my tax return?
Our clients are able to claim more deductions, pay less tax and see a greater return on their investments. Our tax depreciation schedules are specifically designed for easy use by accountants to include depreciation deductions into an investors’ income tax assessment. This information is prepared in full compliance with the ATO guidelines, which explains that the deductions are detailed and demonstrated correctly in the event of an audit.
What is a Quantity Surveyor?
A quantity surveyor specializes in estimating the value of building construction costs. They apply their knowledge during many stages of construction to determine costs of building works on any residential or commercial property.
The ATO recognizes quantity surveyors which have the essential skills of calculating the cost of items for the depreciation purposes for the construction work to be done with the residential or commercial property.
What about plant and equipment depreciation?
Plant and equipment covers items such heating and cooling appliances, ovens, dishwashers, carpet and blinds etc. Building allowance is the construction costs of the building itself. For example, concrete and brickwork. Both these costs can be offset against your assessable income.
The government has provided the public with an opportunity to express their opinion on the new plant and equipment depreciation legislation. The public are able to have their say until August 10 2017. The new law for limiting deprecation on secondhand assets is decreasing “the amount an investor can deduct for a previously used depreciating asset for the purpose of gaining or producing assessable income”.
Capital Gains tax changes and implications
Reading about this legislation is extremely vital for property investors as they need to know the detail of a reduced CGT liability. With this legislation, any property investor who cannot claim depreciation on previously used plant and equipment due to these amendments will be able to claim a capital loss for failure in value of the plant and equipment assets. This will only be able to counterbalance future capital gains.
During the time of purchase, the value of the previous used depreciation assets will need to be established. A decline in value will need to be calculated for the assets so the value of the termination can be decided during the time when the property is sold. The difference between the termination value and the time of purchase value is the capital loss which will depreciate the owner’s CGT liability.
How will these changes affect an investor’s cash return?
These changes will affect an investor’s cash return as this will limit the depreciation deductions that are accessible to property investors. Every year this leads to a decrease in your cash flow.
For you to sort out your tax depreciation sooner, book your appointment with Oak Accountants and BMT for your quantity surveying needs this tax season!
