I wanted to spread some Christmas Cheer and mention the 5 little-known things you CAN claim on if you’ve purchased a property built after 1987. This season is about giving and I hope the below gives you some further insight on how to maximise your Tax Depreciation deductions.
1. A Capital Idea
Many investors do not realise that even if the property is not brand new, they can still claim on the Capital Works/Improvements or Structural aspects of the property. If the property was built prior to 1987, you cannot claim on the original structure but you can claim on the structural portion of any renovations/improvements that have been done by previous owners. Kitchen, bathrooms and Outdoor improvements typically have a higher structural component.
2. Fees Incurred
For any significant renovation or improvement, its is likely that council fees were incurred along with Architect and maybe even Engineer’s costs. Whether incurred by yourself or a previous owner, these expenses should be factored into your depreciation report.
3. Many Parts to the Whole
So you’ve purchased a second-hand property and you can see that previous owners have installed a ducted Air-conditioning system. Air Conditioners are categorised as plant & equipment by the ATO so you cannot claim anything, right? Well, while you cannot claim on the mechanical components, the ducting is considered structural, or capital, in nature and you are able to claim deductions on this.
4. Just Cosmetic?
Painting (both internal and external) is considered to be a capital improvement and can therefore be claimed by subsequent owners. The same is true for Floor Sanding or Polishing. Whilst these are typically not HUGE amounts, they are claimable and help to reduce the investor’s taxable income – “every little bit helps”
5. The Common Good.
Did you know that when buying into most Strata Titled complexes, you are actually taking ownership of a portion of the common areas and facilities? If you have purchased a second-hand property in a Strata Titled building or community, you are eligible to claim your portion of deductions on the capital works items/assets. This often includes things like swimming pools, lobby upgrades and basements etc.
As accredited Quantity Surveyors with over 40 years’ experience, Washington Brown are recognised by the ATO as having the necessary skills and experience to estimate the cost and dates related to previous renovations or improvements.
If you’ve purchased an “older” investment property and have not had a depreciation schedule prepared, get in touch via the link below. We’ll happily provide you with a free estimate of the likely deductions available.