Claim Depreciation on your Overseas Property

overseas property

Fancy a villa in Tuscany? What about a condo in LA or a loft apartment in New York? Yes, please!

But the question everyone wants answered; can I claim depreciation on this property… The simple answer is yes!

Difference between overseas and Australian property depreciation

The main difference between an overseas property and one in Australia is in regards to claiming the building allowance. That’s the wear and tear on structural elements of the property like bricks and concrete.

With Australian properties you’re entitled to claim 2.5% of these construction costs per annum, as long as the property was built after July 1985. The rate for overseas properties is the same – but the date is different. Construction of an overseas property must have commenced after 1992.

So, the easiest way to maximise your deprecation benefits on an overseas property, is to look for a newer property that has been built in the last decade or two. Internal items like carpets, ovens, lights and blinds – can also be depreciated, as you would with an Australian property. This is often referred to as plant and equipment.

(NOTE: Deductions for these plant and equipment items may only apply if you bought the property prior to May 9, 2017 – Read about the Budget changes here).

A good place to start your research is on the ATO’s website. You can download a publication called Tax Smart Investing: What Australians Investing in Overseas Property Need To Know.

Research

Like any property investing, you’ll need to do your homework. This entails researching the local market, finding out about rental yields and occupancy rates. But the best Depreciation Calculatorthing about research nowadays, it that this can all be done online at the tip of your fingers.

The main barrier to depreciating an overseas property is working out the constructions costs, along with the expense of flying a quantity surveyor overseas.

Washington brown has a number of affiliations around the world. We regularly inspect properties in London and New Zealand. I even did an inspection in Koh Samui, Thailand recently.

So there you have it. You can still invest in overseas property and reap the benefits of the Australian Tax system’s depreciation laws. But remember, the property must have been build or renovated after 1992.

If you need a depreciation schedule for your investment property – get a quote here or work out how much you can save using our free calculator.

Depreciation on Holiday Homes

Depreciation on Holiday Homes

Depreciation on Holiday Homes

Go on holidays and claim depreciation!

The ATO has recently announced a crackdown on property investors over-claiming deductions on holiday homes, this includes depreciation.

If you’ve been on holidays, it’s very easy to get caught up in the romance of owning your own holiday home.

Depreciation Calculator

Purchase price, stamp duty and mortgages offset by the rental income can make it look good in the halo of optimism that comes with the first flush of real estate lust.

The “we have got to have it and we will make it work” compulsion is common when purchasing lifestyle properties.

Holiday houses can be depreciated if they are rented out to a third party but that doesn’t mean you can’t stay there when you want to.

As long as it’s available for rent most of the year you can block out a two-week period over Christmas and claim the depreciation pro rata.

You are still entitled to that deduction regardless of how many weeks the property is actually rented out, as long as it was available for the full 50 weeks.

TIP – Make sure you pro-rata any depreciation claim if you have used the property personally.

If you own a holiday home – make sure you start the ball rolling with a depreciation schedule by getting a quote here.

Wallabies Win affects Overseas Investment

overseas investment

After an early wake up on Sunday to watch the Wallabies have a brilliant victory over our old nemesis, England (commiserations guys) I was drinking my 3rd coffee of the morning and in a euphoric haze I starting to wonder to myself, how many teams are playing in this tournament?

It turns out there are 20 teams competing in England at the Rugby World Cup, however, as my mind rambled, counting which countries are included I dozed, and somehow drifted onto how many countries Washington Brown have prepared depreciation reports for over the last few years (because everything relates back to work, right?). It turns out, we have carried out property depreciation reports for a whopping 29 different countries to date, and by the end of the week that number will increase to 30! Go us!

overseas investment

Depreciation Quote Schedule The scope of work we are currently experiencing is really interesting from a Quantity Surveying perspective and is becoming increasingly varied, from apartments and houses in the UK and USA, multi million dollar villas in Monaco, ski chalets in Bulgaria, and even blocks of apartments in Iran.

Our clients also vary from new migrants renting out their former homes, Self-Managed Super Fund Trustees looking to spread risk, ex pats coming to work in Australia, or returning home from overseas posting, as well as mum and dad investors expanding their investment portfolio.

To me this really reinforces the global economy we now live in, and what a wonderful diverse melting pot of nationalities Australia is made up of.

If you have bought an overseas investment property, or you migrated to Australia and are now having to declare your rental income on a property you still own in your home country to the ATO, you might be entitled to claim depreciation on any overseas property you still hold and reduce your taxable income.

When claiming on an overseas investment property you need to be aware that there are some differences to Australian investment properties in regards to ATO rulings.

Three of these differences are:

  1. The building allowance component is only applicable for residential properties built after 1990, not 1987 as it is for Australian residential investment properties. (NB.all investment properties qualify for plant and equipment component)
  2. Construction costs vary from country to country and in in our reports are estimated at the local rates, not Australian rates. We then convert into Australian currency at the prescribed ATO exchange rate
  3. Just like in Australia, overseas investment properties start depreciating from the date you take ownership. However you can only claim tax deduction from the time you became an Australian tax payer, so it’s important to provide this information before proceeding to ensure it is worthwhile for you to have a report completed.

If you’re unsure if your property qualifies for depreciation allowances, or whether you have owned it too long to be eligible to claim depreciation deductions, give one our tax depreciation specialists a call and we can talk through your investment scenario to see if there is a benefit in having a report prepared.

Click here to get a Property Depreciation Quote

Overseas Property Depreciation

Overseas PropertyFancy a villa in Tuscany, what about a Condo in LA or Loft apartment in New York? I do!

But can I claim depreciation on this property… The short answer is yes! 

The main difference, however, is in regards to claiming the building allowance – that’s the wear and tear on structural elements of the property like bricks and concrete. Depreciation Calculator

With Australian properties you’re entitled to claim 2.5% of these construction costs per annum, as long as the property was built after July 1985. The rate for overseas properties is the same – but the date is different. Construction of an overseas property must have commenced after 1990.

So if you want to maximum your depreciation benefits on an overseas property, look for a newer property built in the last decade or two. Internal items like carpets, ovens, lights and blinds – can also be depreciated, as you would with an Australian property. This is often referred to as plant and equipment.

A good place to start your research is on the ATO’s website. You can download a publication called Tax Smart Investing: What Australians Investing in Overseas property needs to know.

Like any property investing, you’ll need to do your homework, research the local market, find out about rental yields and occupancy rates. but the best thing is – this can all be done on-line these days.

The main barrier to depreciating an overseas property is working out the constructions costs, along with the expense of flying a quantity surveyor overseas.

Washington Brown has a number of affiliations around the world. We regularly inspect properties in London… New Zealand… I even did an inspection in Koh Samui (Thailand) recently.

If you have an investment property located overseas, we can help you claim the maximum eligible deductions. Request a free quote here to get started.

Here’s a video I created about claiming depreciation on overseas property, I hope you enjoy.

So there you have it. You can still invest in overseas property and reap the benefits of the Australian Tax system’s depreciation laws. But remember, the property must have been built or renovated after 1990.

If you need a depreciation schedule for your investment property – get a quote here or let us prepare an estimate of the likely deductions available to you – just submit your property for a free review here. Start claiming depreciation on your overseas property today!