HOW WE MAXIMISE YOUR DEPRECIATION DEDUCTION
The Director of this firm is an Associate member of The Australian Institute of Quantity Surveyors
Tax Depreciation and Capital Allowances
What is Tax Depreciation?
Tax Depreciation is a legitimate tax deduction available to owners of income producing properties to cover the costs of wear and tear on that property.
Introduced as an incentive to encourage people to save for their retirement, it acknowledges that certain items such as carpets, whitegoods, curtains, etc depreciate in value over time due to daily wear and tear.
As a result, owners of income producing properties are entitled to claim a tax deduction to help fund the eventual replacement of these items.
To be able to claim this deduction a property investor must engage a “suitably qualified professional such as a quantity surveyor” to prepare a Tax Depreciation and Capital Allowances Schedule on their behalf.
It is important to note that the Australian Taxation Office (ATO) recognises that Quantity Surveyors are suitably qualified professionals.
It is also important to note that accountants, solicitors, real estate agents and property valuers ARE NOT recognised by the ATO as being suitably qualified to prepare such Schedules.
Redline Quantity Surveyors are specialists in Tax Depreciation and Capital Allowances and will record all the depreciable plant and equipment contained in your property and present this in a fully legible and easy to understand Schedule outlining all your depreciation entitlements.
What are Capital Allowances?
Just as the plant and equipment inside an investment property suffers from wear and tear so does the building structure itself.
As a result, property investors are also able to claim a flat 2.5% deduction per annum based on the original construction cost of the property for each year of ownership.
This percentage can rise to 4% per annum depending on the type of property and when it was built.
So, just as with the Tax Depreciation of plant and equipment, you can also claim a further deduction of the building structure as well.
Redline Quantity Surveyors will personally inspect the building noting its construction type and age. Based on this information, we will prepare an estimate of the original construction cost, which forms the basis of your deduction.
When choosing a Quantity Surveyor to undertake such an exercise, make sure that they do not specialise in Tax Depreciation and Capital Allowances Schedules only as a broad knowledge of the historical and current construction costs is required to produce the most accurate estimate.