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How to maximise your building allowance on your investment property.
These blogs are a step-by-step guide designed to help you, the property investor, claim the maximum depreciation you are entitled to.
The building allowance relates to the structure of the building, which you can claim at the rate of 2.5% per annum. Though some property types attract a higher rate of depreciation.
What’s the difference between the Building allowance and the capital works allowance?
Nothing actually – it’s just a different terminology meaning the same thing.
The capital works deduction is slightly different, though – it refers to the amount you can actually claim.
As stated before, this is generally 2.5% per annum of the building.
What items does it refer to?
Under this allowance, you can claim the structure of the building. Structural elements include components such as concrete, brickwork or gyprock.
It’s the stuff that is going to last a long time in your property.
This is unlike the plant and equipment in your property – which wears and tears faster and thus has a shorter effective life.
How do I claim it?
You need to order a depreciation schedule from an experienced quantity surveyor in order to claim it.
The fees are tax-deductible and generally most quantity surveyors offer a money back guarantee.
Claim Maximum Building Allowance Articles:
Step by Step Guide on How to Calculate Depreciation on a House for Taxes. Before getting scared off by the following explanation of calculating depreciation, you need to know that tax depreciation quantity surveyors can prepare a custom depreciation schedule for you. All you’ll need to do is hand it over to your accountant at […]
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So how does commercial property really stack up against residential in relation to depreciation? While we have covered the differences between the two, there are also some similarities. For example, the higher the quality of the commercial property the higher the depreciation. And the taller the building in commercial property, the higher the depreciation allowance. […]
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Compiling the report properly A depreciation schedule on your investment property can generate significant tax savings – as long as it has been complied correctly. In my experience there are three main areas the Australian Tax Office tends to target come tax time. 1. Repairs and maintenance One of them is whether you’ve claimed repairs […]
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There are many myths floating around when it comes to tax depreciation. Especially regarding what property investors are entitled to claim. Below are some of the most common myths I have heard during my time as a qualified Quantity Surveyor. NOTE: Information below regarding plant and equipment items may only apply to properties purchased prior to May […]
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The Process Before feeling intimidated by the following explanation, if you so choose, all you really need to know is that a quantity surveyor can inspect your property and prepare a depreciation schedule for you, without you having to understand how exactly depreciation is calculated. If that is the case, all you’ll need to do […]
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Whenever I am delivering a presentation or conducting a webinar, I always make sure to leave time for a 30 min Q&A session at the end. In most Q&A sessions, the topic that by-far receives the most queries has to do with the concept of “scrapping” in relation to property tax depreciation. Claiming the Residual […]
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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. Purchase price, stamp duty and mortgages offset by the rental […]
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Understanding Building Depreciation Did you know that a quantity surveyor can be extremely helpful when dealing with investment property depreciation? People naturally aren’t too happy dealing with anything that has the word “depreciation” on it which would suggest a decrease in value. In the case of investment property though, depreciation can work in your favour […]
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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 […]
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Is my property too old to claim depreciation? The short answer is no, you can claim depreciation on all investment properties. Depreciation is split into two categories, Building Allowance which is generally deemed to be the structure (walls, slab and roof etc), and Plant and Equipment which is generally items that are attached to the […]
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