As the end of the financial year approaches, it's crucial for property investors to consider all available tax deductions to maximise their returns. One of the most significant opportunities, often overlooked by many investors, is claiming depreciation deductions. A comprehensive tax depreciation schedule prepared by experts can make a substantial difference to your cash flow and overall financial strategy. Here's why every residential property investor should have a tax depreciation schedule and how BMT Tax Depreciation Quantity Surveyors can help you achieve this.
What is Property Depreciation?
Depreciation refers to the decline in value of a residential investment property as it ages and the items within it experience wear and tear. This decline in value is a deductible expense that property investors can claim to reduce their taxable income. Unlike other tax deductions, depreciation does not require out-of-pocket expenses at the time of the deduction, making it an efficient way to enhance your tax benefits.
Why is Depreciation Important?
Depreciation is the second largest tax deduction available to property investors after interest. Both new and old residential investment properties have substantial depreciable value. According to BMT, residential investors can find an average of almost $9,000 in deductions in the first full financial year and more than $40,000 over the first five years. These deductions can significantly improve your cash flow and overall financial returns.
What Can You Claim?
Depreciation deductions are claimable on the building structure (capital works) and the plant and equipment assets within the property. These claims can be maximised by engaging a specialist quantity surveyor like BMT, who can prepare a detailed tax depreciation schedule tailored to your property.
The Role of a Quantity Surveyor
A quantity surveyor, such as BMT, plays a crucial role in ensuring you claim the maximum depreciation deductions available. Their expertise allows them to identify and quantify all depreciable items within your property, including those you might not be aware of. This ensures you do not miss out on any potential deductions.
What's Included in a BMT Tax Depreciation Schedule?
A BMT Tax Depreciation Schedule includes:
Forty-year life: A detailed forty-year forecast table illustrating all depreciable plant and equipment and capital works deductions.
Different depreciation methods: The difference in claims using both the prime cost and diminishing value methods of depreciation.
Common property: Depreciation for common property such as lifts and swimming pools where legislation allows.
Additionally, a BMT Tax Depreciation Schedule is structured to help you:
Claim missed deductions: Amend previous years' tax returns to re-coup any unclaimed or missed depreciation benefits.
Pro-rata calculations: First-year ownership deductions based on the property's settlement date.
Split schedules: Can be split based on ownership percentages, which can lead to higher deductions for owners in earlier years.
Maximise Your Tax Return
As the financial year-end draws near, it's essential to maximise your tax return by claiming all available deductions. Depreciation is a powerful tool that can significantly reduce your taxable income and increase your tax return. However, many investors fail to fully utilise this opportunity. By working with BMT Tax Depreciation Quantity Surveyors, you can ensure you are claiming the maximum deductions available, potentially saving thousands of dollars.
SPECIAL PROMOTION OFFER FOR OUR LANDLORDS
To help our landlords take advantage of these benefits, we are offering an exclusive promotion in partnership with BMT Tax Depreciation Quantity Surveyors. Click the contact form below to request a promo code that offers a reduced fee on your residential depreciation schedule. Don't miss out on this opportunity to maximise your tax return and improve your cash flow.