Claiming depreciation on residential property is one of the most important steps in an investor’s journey. But those new to property investing often overlook some important key items of depreciation.
The three most commonly missed items property investors can claim are:
• Design and professional fees
• Council costs
• Builder’s profit
Most people know about the more common plant and equipment items such as carpets, ovens and blinds that they can depreciate in an investment property. But the three listed above often get missed and unclaimed.
I bet you didn’t know you could depreciate design fees? By design fees, I’m talking about architectural fees, engineering costs, and any other design fees involved in creating the property. They are all legitimate tax deductions against your income.
The second, commonly forgotten or unclaimed item, is council fees. A lot of investors overlook claiming the costs associated with dealing with councils. This is not just limited to building application and development application fees, but may include council contributions, for instance, costs a developer may have to spend on local community works, like building a playground. You can claim your portion of these costs as part of your depreciation claim.
It is also important to note that if you engage a builder directly to construct your investment property, the builder’s profit component of the work can be claimed. However, if you buy a property from a speculative builder/developer then you cannot claim the builder’s/developer’s ‘profit’.
From my experience, it always pays to have a quantity surveyor look over your investment property to ensure you are claiming the maximum depreciation allowances.