As an expert in the market I am baffled by the number of companies that offer do-it-yourself depreciation schedules. Not only are there some potential legal issues but, more importantly, you will be missing out on deductions.
The Issue with DIY Depreciation
The DIY depreciation option generally gives you a tick sheet and asks you to take your own measurements of rooms and other parts of the property.
Now, let’s say you measure from one bedroom wall to the other. If you do that all around the house you could reduce the property by 10% in gross area. At around $1,500 per square metre to build, you would have missed out on something like $15,000 worth of tax deductions.
When a client comes to us needing a depreciation report, we typically use the actual construction costs collected from over 40 years of working on Australian development projects, or we work from accurate plans and/or a quantity surveyor’s inspection. This involves a measurement of all the rooms and areas in the property (allowing for wall widths and other anomalies) and all the plant and equipment items including carpets, blinds, ovens and air conditioners.
It is a thorough process and you should use technically qualified people to do it.
The AIQS also points out that those property owners who attempt to estimate their own depreciation, or use non quantity surveying qualified people, risk submitting an incomplete or poor depreciation report, which could be a double whammy. It could not only cost them in missed deductions but could also possibly attract an audit by the ATO if their report is not up to the standard required.
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