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Old Property Doesn’t Mean Lost Claims
Some property owners may be hesitant to look into depreciation as they believe their claims may be too old to pursue. However, this is not always the case and should be investigated on a case-by-case basis. The first step to claiming property depreciation on an older property can save you thousands in taxes.
But how do property investors begin when they want to pursue property depreciation claims?
Getting started is as simple as reaching out to Washington Brown! With our extensive knowledge of property depreciation and guidance, we can ensure that you’re receiving the total claim amount you deserve.
Maximise your claims by calling us at 1300 990 612 today!
Maximising Your Old Property Depreciation With Washington Brown
Many real estate owners will make a mistake in conducting their property depreciation audit. Without the proper support, you can miss out on thousands of dollars that you would have otherwise been able to claim.
Additionally, misreporting can result in an audit that could have been avoided. Fortunately, Washington Brown is dedicated to ensuring you can maximise your depreciation claims safely and effectively.
At Washington Brown Depreciation, we are experts in property tax depreciation. Our specialist property depreciation team offers you more significant savings by leveraging their extensive experience to find claims on your property.
How It Works
Getting Started With Washington Brown
Step 1: Contact Us
When you’re ready to maximise your tax savings on your property, contact us. We’ll conduct a property inspection where necessary to ensure that your real estate deductions meet ATO requirements.
Step 2: Let Us Find Opportunities to Claim
We analyse your property, find deductions, and document all claims so that you can rest assured that you’re getting the savings you can claim from your property.
Step 3: Save Money!
Whether you’re a property real estate owner or tenant, Washington Brown is dedicated to helping you save money. The simple answer is to reach out to us, let us find your claims, and save!
Get In Touch For a Free Quote
Case Study – Old Property Depreciation
See What We’ve Accomplished For Those Making Claims On Older Residential Properties.
- Location:
- Sydney
- Settlement Date:
- 08/07/2015
- Year Built:
- 1998
- Purchase Price:
- $751.197
- First Year Claim:
- $13,790
This client bought a house built in 1998, meaning there was still 21 years of building allowance left plus plant and equipment deductions. A renovation to the kitchen and bathrooms by the previous owners in 2011 added even more depreciation to this client’s claim.
The Claim
* Please note that these results are only accurate for properties purchased before 9 May 2017 due to changes in the Federal Budget. To see how newer properties purchased after this date are affected, visit our comprehensive Post-Budget FAQs.
Based on the diminishing value method, these are the final amounts the client could claim each year. The claim includes the capital works deductions (i.e. bricks and mortar) and the plant and equipment assets (i.e. the fixtures, fittings, and appliances), which are explained in more detail below.
As you can see, even an old property can yield substantial deductions; this client could claim $13,790 in the first year alone.
Factors That Affected The Final Depreciation Claim Of Old Property
Building Allowance (Capital Works Deductions)
The depreciation of the building structure itself is considerably simple. To calculate the building allowance, we take the total construction costs and deduct the cost of plant and equipment and any ineligible items (like demolition and living plants). The deductions will be 2.5 per cent per full year of the building allowance, totalling 40 years.
This property had renovations by the previous owners, including the kitchen, bathrooms and internal painting in 2011. As trained Quantity Surveyors, our team was able to identify these renovations and estimate the total construction costs at $28,691, which was added to this client’s depreciation schedule.
In this case, $4,501 is claimable per full financial year. The graph below only shows the first ten years, and a full report calculates up to 40 years.
Plant And Equipment
These items include blinds, carpets, appliances, light fittings, etc. The total value of these items in this house was $19,588. These items depreciate faster than the ‘bricks and mortar’ classified as building allowance. Also, because these items aren’t brand new, they have a shorter effective life, further increasing their depreciation rate.
Use our FREE depreciation calculator work out the likely tax depreciation deduction on your investment property.
Property Depreciation Calculator
Find out the potential return on a property
Case Study – Renovations
See What We’ve Accomplished For Those Making Claims On Older Properties.
- Renovation Cost:
- $50,146
- Renovation Completion Date:
- 01/07/2016
- First Year Claim:
- $8,353 (in addition to the regular depreciation)
- First 10 Years Claim:
- $45,952 (in addition to the standard depreciation)
If you’ve done any renovation work or purchased additional items for your investment property, they can be added to your property tax depreciation schedule.
It doesn’t matter if the previous owner paid for the renovations – as long as the work took place post-1985, you (as the new owner) are entitled to depreciate them. Don’t worry if you aren’t sure about these. Our team at Washington Brown will typically be able to identify and calculate costs from past renovations.
Post Settlement Renovations Of Old Property
This client undertook a $50,146 renovation on his newly purchased home. It included upgrading the kitchen, two bathrooms, internal painting, new flooring (floating timber and carpet), and new blinds and light fittings.
The total cost of $50,146 was split between Capital Works ($30,983) and plant and equipment ($19,163). The Capital Works will be claimed at 2.5 per cent per annum for 40 years, while the plant and equipment value will be deducted faster. This added $8,886 to their 1st-year claim and $24,995 to the first ten years. Over 40 years, the entire $50,146 will be deducted.
Pre-Settlement Renovations
* Please note that these results are only accurate for properties purchased before 9 May 2017 due to changes in the Federal Budget. To see how properties purchased after this date are affected, visit our comprehensive Post-Budget FAQs.
The unit below was renovated in the mid-90s. The previous owner spent approximately $55,000 putting in a new kitchen, bathroom, blinds, and carpet.
The current owner would be looking at about $4000 – $6000 worth of tax deductions in the first year alone. That’s because items like carpet and blinds have a relatively low effective life – which means you can claim them quicker.
The trouble is, in most cases, the new property owner won’t have access to the renovation costs, but we can help.
Washington Brown has a team of trained quantity surveyors who can inspect the property and estimate the price of the renovations. We then create a depreciation schedule we can send straight to your accountant.
See For Yourself
You can download a copy below to see sample depreciation schedules for various property types. Reading it may help you better understand the process and how it could apply to you.
Want to see how much you could claim on your property? Use our online calculator to get an estimate within seconds by following these simple steps:
- Click through to our Old Property Depreciation Calculator
- Enter the property’s Purchase Price, Build Year, Type, and Standard of Finish
- Click ‘Calculate’ and view your results
Frequently Asked Questions
Learn How Washington Brown Can Help You
Can you claim depreciation on an old house?
Property depreciation occurs when an asset loses value due to physical deterioration over time.
According to Australian tax law, individuals who own real estate used for income-producing purposes are entitled to claim the depreciation of that property against their taxable income.
There are two types of depreciation allowances available for properties:
- Capital Allowances: This includes construction costs of the building itself, such as concrete and brickwork. This is also known as capital works deduction on old houses or Division 43.
- Plant and Equipment: This includes items within the building ranging from electrical gates to hoses, water pumps, and security systems
With the building itself and the items outside of it experiencing damage over time, you can make claims on both items to reduce your taxable income and maximise your profits.
Are depreciation reports worth it on old properties?
Real estate, like anything, loses value over time as it begins to experience regular wear-and-tear. If you fail to report this gradual damage, you end up paying more than you should.
Some old property owners may shy away from deductions because they believe they aren’t entitled to them (in buildings built before 1987 with no renovations made). However, you can tap into these savings if your property was built after 1987 or has undergone renovations.
Maximising your property depreciation deductions is essential because it could save you millions of dollars on your property.
Not only is it common sense, but it’s good business to maximise your deductions and, in turn, your profits. Many owners miss out on the savings that can be made through depreciation – don’t be one of the statistics!
Is My Property Too Old To Claim Deductions?
Generally speaking, your property is not too old to claim deductions, which is excellent news for you!
Many people we speak to believe there’s no benefit in claiming the depreciation on their 10 to 15-year-old property. However, building allowance is claimable at 2.5 per cent of construction costs from the date of construction, as long as it’s after 15 September 1987, so there’s usually plenty left to claim just within this.
Additionally, if you purchased the property before 9 May 2017, and there’s any relatively new plant and equipment, such as carpet, air-con or lighting, in the property, it could mean much higher deductions. We’ll calculate these deductions for you when you work with us!
Do You Need To Get A Professional Depreciation Schedule?
Yes. A depreciation schedule will maximise the tax savings on your investment.
The good news? You only need to get it done once, which you can easily accomplish with a Washington Brown depreciation schedule valid for up to 40 years (the lifetime of the building). However, we recommend updating the report if you renovate, repair, or replace internal items.
You can provide the report straight to your accountant at tax time.
How Much Does A Depreciation Schedule Cost?
The cost of preparing a tax depreciation schedule varies according to numerous factors, including your property’s location and size. Get an individual obligation-free online quote from Washington Brown now.
The fees are 100 per cent tax-deductible, and we guarantee you’ll save at least twice our fee in the first 12 months, or there will be no charge!