What is a tax depreciation report?
A property depreciation report is a report prepared by a Quantity Surveyor that saves property investors money.
In essence, property investors can claim the wear and tear of property investment, just like a business can claim the depreciation entitlements of the computer they use for their business.
How to calculate property depreciation for taxes can be complicated, and that is why you need a Quantity Surveyor to prepare a report for your individual circumstances.
The Australian Taxation Office accepts a report from a qualified quantity surveyor, such as Washington Brown.
Why use Washington Brown to Prepare my rental depreciation report?
A Washington Brown depreciation report will outline the wear and tear on your investment property, which is classified as a form of tax deduction. In Australia, the depreciation report must be up-to-date with the ATO (Australian Taxation Office) provisions and changes that apply to:
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- We make sure you claim the maximum allowance you are entitled too.
- The report is valid for 40 yearsAll previous renovations and acquisition improvements are factored in the report
- Joint ownership reports and split reports regarding each of the owners are prepared when applicable
- Furniture package acquisitions are included per standard
- Time lived in the property is also included and factored in the report
- Washington Brown has been in business for over 40 years
What type of allowances can I claim on my depreciation schedule?
While we are on the subject of ATO, there are two types of allowances regarding depreciation:
- Plant and Equipment – which are items that can be found within the building, like ovens, air conditioners or carpets
- Building Allowance – which are constructions costs of the building itself, for example, concrete and brickwork.
Please note – you can only claim Plant & Equipment on brand new properties now. Still, in every rental depreciation report, you will be able to claim the Building Allowance Rental Property deduction.
What is the process of getting a building depreciation report?
Let’s explain how it works. You can claim most of the depreciation based upon the original construction cost of a property.
However, the process itself is not as simple as it looks; only the result for the client is. Since you can’t just estimate the construction cost claims by yourself, you’re going to need a qualified quantity surveyor to do that for you.
They will inspect the property and create a bespoke property depreciation schedule as a professional. According to the ATO rules mentioned above, the construction cost (the basis for the write-down) can only be estimated by Quantity Surveyor.
What information does a the report contain?
Wanting to “get your money’s worth” is only natural, which is why we’re going to share the essential information you will be getting in the building depreciation report.
- A breakdown of the applicable capital works assets that can be claimed.
- A financial analysis of the plant and equipment included within the property and whether you can now claim those items.
- A breakdown of any items you have included within the property itself.
All of the above will enable us to create a high-quality, detailed, per ATO requirements tax depreciation report that will save you money.
How important is a tax depreciation report for investment property?
The rental depreciation report for investment property is helpful because you, as an investor, can maximise your property’s cash flow and tax benefits each financial year.
The most sensible method to approach this is to hire professionals who will consider each cost from the settlement date.
You would want an expert who can factor in the diminishing value or prime cost methods of depreciating assets, depending on the property type and other relevant factors.
It’s always recommended that property investors consult with a qualified quantity surveyor who has systematic knowledge of the current tax depreciation rules and capital deductions legislation, especially before submitting the tax return with ATO.
A building depreciation report can be a powerful tool for cost reductions because, as we said above, it will reduce your taxable income. It’s a prudent way to save money by calculating the depreciation tax reduction in your investment plan.
How much does a property depreciation report cost?
Pricing can vary depending on whether you need a depreciation report for a house or commercial property. Generally speaking, for a residential depreciation tax depreciation schedule, you will pay between $330 and $715, including GST.
Not all depreciation reports are the same, but make sure you find out whether the tax depreciation report needs an inspection or not.
The laws have changed, and Washington Brown will advise you on your depreciation report’s best plan and cost.
Some companies advise that all properties need an inspection – that is not the case anymore.
To find out how much a depreciation report costs, click the link below.