As the owner of an investment property you’re entitled to claim depreciation on your building and its fixtures and fittings. Claiming depreciation is a significant taxation benefit, and one which many investors are unaware of.
As a building gets older and items within it wear out, they depreciate in value. The Australian Taxation Office (ATO) allows property investors to claim a rental & investment property depreciation deduction related to the building and plant and equipment items contained within it. There are more than 1500 items identified by the ATO as depreciable assets.
In order to claim these depreciation deductions, investors are encouraged to enlist a specialist Quantity Surveyor to complete a comprehensive, personalised tax depreciation schedule. A depreciation schedule outlines the deductions available on a specific property for the life of the property and is used by the property investor’s Accountant when preparing a tax return.
The Tax Depreciation Report will include a detailed outline of two major components:
Capital Works Allowance (Division 43)
Plant and Equipment (Division 40)
What is deductible under Capital Works Allowance?
Here are a few examples of what depreciable items you may be able to claim:
- Built in kitchen cupboards
- Clotheslines
- Door and window fittings (such as handles, locks etc)
- Driveways
- Fences and retaining walls
- Garages
- Sinks, basins, baths and toilet bowls.
What is plant and equipment?
Examples of items that can be depreciated as plant and equipment include:
- Carpets, vinyl, linoleum and other removable floor coverings
- Hot water systems, heaters and solar panels
- Air conditioning units
- Blinds and curtains
- Light fittings
- Swimming pool filtration and cleaning systems
- Security systems
If you wish to find out if you can save tax, please contact our office.
