Depreciation schedules take the property you purchase and divides it into its separate components, this allows the depreciable items to be identified and correctly valued so all legitimate allowances can be claimed for you. Having a schedule completed at, or soon after settlement is the best time.
So many Australians miss out on property tax deduction claims every year. Tax depreciation on properties, used to generate an income, is a legitimate deduction which the government allows you to claim. Due to the of lack of information on property depreciation rules, tax savings worth thousands of dollars are missed out.
Claiming for a tax deduction on the value of your property seems difficult but with the help of a professional expert, it can become really easy. Claiming depreciation can make a huge difference in a property owner’s cash flow. Despite all of this, it is most often missed.
Depreciation is a non-cash expense which you can claim every year on your property. You do not need to spend any cash to make this claim.
You are claiming on the declining value of your buildings or assets. Of course, there are certain conditions like any other tax deduction. For dwellings If you have a residential property which was built before 1985, then you can claim depreciation on Division 40, Depreciating Assets only. But if it was built, renovated or extended after 1985, then you can claim under Division 40 as well as Division 43.
1. Division 40: Depreciating Assets: This element of property depreciation schedule is all about assets like plant and equipment,. Every item which has a diminishing life is included in this. The tax deduction calculation is carried out based on the effective life of the items.
2. Division 43: Capital Works Allowance: The immovable parts of the dwelling are a part of this division. The property depreciation rules state that this capital works allowance is calculated on the basis of the construction cost of the building and not the current purchasing price.