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Introduction
As a property investor, one of the key strategies to minimise your tax liability is to take advantage of tax depreciation schedules.
Depreciation schedules allow you to claim deductions for the wear and tear of your investment property over time. However, there are misconceptions about the need for physical site inspections to obtain the maximum depreciation benefits. In this article, we will explore the three reasons why an inspection may not be necessary and how Washington Brown can help you pay less tax.
The Changing Laws and Second-Hand Plant and Equipment Items
Because the laws have changed. You see, you can no longer claim depreciation on second-hand plant and equipment assets anymore. That’s things like ovens, dishwashers and blinds, even if they’re one day old.
In the past, property investors could claim depreciation on second-hand plant and equipment items, such as appliances and fixtures, regardless of their age.
However, the laws have changed, and these deductions are no longer available. This means that you need to purchase a brand-new property with unused appliances to claim these items or buy them brand new an install them in a second hand property.
Washington Brown Already Has the Construction Costs
Because we’ve already got the cost. In fact, we’ve got the cost on nearly every building Meriton has ever built. That seems like half of Sydney, right?
Washington Brown has worked with numerous developers over the last four decades, including Meriton, one of the largest property developers in Australia. This extensive experience has allowed Washington Brown to obtain the cost data for a significant number of buildings.
If your investment property is one of these buildings, an inspection may not be necessary as Washington Brown already has the cost information. By leveraging this existing data, Washington Brown can provide you with a depreciation schedule without the need for a physical property inspection, saving you time and money.
You Can Provide Plans, Specifications, and a Building Contract
Because you’ve already got the cost. You see, if you can provide us with the plans, the specifications and the building contract, there’s no more accurate way to get a depreciation schedule that will be ATO compliant and still get you the maximum depreciation so you can pay less tax.
Suppose you have access to the plans, specifications, and building contract of your investment property. In that case, Washington Brown can create a highly accurate depreciation schedule that is compliant with the Australian Taxation Office (ATO) regulations.
By utilising this detailed information, Washington Brown can calculate the maximum depreciation deductions for your property, allowing you to pay less tax. This method eliminates the need for an inspection and ensures that your property depreciation schedule is both precise and ATO-compliant.
Non-Residential Properties and Second-Hand Plant and Equipment Items
The first type of properties we always inspect are non-residential properties, things like offices, industrial properties, retail, because you can still claim second-hand plant and equipment items on those types of properties.
While inspections may not be necessary for residential properties due to the changes in the laws regarding second-hand plant and equipment items, non-residential properties are an exception.
Offices, industrial properties, and retail spaces still allow for the claim of depreciation on these items. Therefore, Washington Brown always conducts inspections for non-residential properties to ensure that all eligible deductions are included in the depreciation schedule.
Non-Typical Properties and Unique Designs
The second type of property we always inspect are non-typical properties. They might be on a sloping site or a unique design.
Non-typical properties, such as those situated on sloping sites or featuring unique designs, require inspections to accurately assess their depreciation potential.
These properties often have specific characteristics that can impact their depreciation values. By conducting inspections, Washington Brown can thoroughly evaluate these properties and provide a depreciation schedule that reflects their unique attributes.
This ensures that you receive the maximum depreciation deductions for your investment.
Implications and Potential Impact
The three reasons discussed above highlight the importance of understanding the nuances of depreciation schedules and the need for inspections. By staying informed about the changing laws and regulations, property investors can make informed decisions to optimise their tax deductions.
Leveraging the existing cost data obtained by Washington Brown and providing detailed information about the property can streamline the process of obtaining a tax depreciation schedule. This not only saves time and money but also ensures compliance with ATO & The Australian Institute of Quantity Surveyors guidelines.
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Conclusion
In conclusion, depreciation schedules are a powerful tool for property investors to minimise their tax liability. While inspections may not be necessary for some residential properties due to the changes in the laws regarding second-hand plant and equipment items, non-residential properties and non-typical properties still require inspections to maximise depreciation claims.
Washington Brown, with its extensive experience and access to cost data, can provide accurate and ATO-compliant depreciation schedules without the need for inspections in many cases. By understanding the intricacies of depreciation and leveraging the expertise of professionals, property investors can pay less tax and optimise their investment returns.