Rental Property Depreciation
The depreciation deductions that often go unclaimed
Depreciation continues to be one of the most common deductions missed as research suggests that just 20 per cent of property investors maximize the deductions they can claim.
On average, an income producing property owner can expect to claim between $5,000 and $10,000 in depreciation deductions in the first financial year alone. These deductions play a vital role in helping property investors to improve their available cash flow and reduce the costs of holding a property.
With such high numbers failing to maximize depreciation, investors often ask what items are most often missed or are rarely claimed to avoid missing out on deductions in the future.
To assist investors, our preferred Quantity Surveyors (BMT Quantity Surveyors) have compiled a list of common assets missed and more obscure assets rarely claimed as shown below –
- Ceiling Fans
- Clocks – electrical
- Door Closers
- Exhaust Fans
- Freestanding bathroom accessories
- Garbage bins
- Garden Sheds – freestanding
- Smoke alarms
- Closed circuit television system
- Garbage disposal units
- Garden watering systems
- Intercom system
- Solar powered generating system assets
- Spa bath pumps
- Window shutters – automatic
As above list shows, ceiling fans, door closers, garbage bins, smoke alarms and freestanding garden sheds are some of the assets commonly missed by property investors.
More obscure and less frequently found items that are rarely claimed included closed circuit television systems (CCTV), intercom systems, garden watering systems and spa bath pumps.
While many of the items in the table have a low depreciable value, the depreciation deductions for these items can add up to thousands of dollars for an investor.
To ensure that depreciation is maximised, it is recommended that investors seek advice and obtain a tax depreciation schedule from a specialist Quantity Surveyor. This will include a detailed site inspection of the property to photograph and note every depreciable asset found in the property. The Quantity Surveyor will then use their expert knowledge of depreciation and utilise methods such as immediate write-offs and low-value pooling to maximise the deductions that can be claimed for the investment property owner.
All of the deductions a property investor is eligible to claim will be outlined in a comprehensive depreciation schedule in a format that they or their Accountant can easily follow and claim the depreciation benefits when they complete their annual income tax return.
For obligation free advice on the depreciation deductions available for any income producing property, property investors can call us on 0449 952 855 or send us your enquiry via our website – www.expert-tax.com.au