Most frequent questions and answers
A property depreciation report (also called a depreciation schedule) sets out all tax depreciation and building write-off claims for a property.
A property depreciation tax report provides a 40-year schedule for capital works allowance (building, dwellings, write-off) and depreciable assets (plant and equipment allowance) on the property, ensuring owners receive the maximum tax entitlements.
Based on your allowances, the report calculates the amount you can deduct each year as part of your tax return.
A depreciation schedule is in the report that lists the depreciable assets related to the property. It tells you or your accountant what tax to claim when putting in your tax return to ensure you claim the correct amount of tax back. A depreciation schedule should be prepared by qualified quantity surveyors.
Two types of depreciation are available:
- Plant and Equipment depreciation – this covers assets associated with your investment property that has a finite lifetime and fall in value over time as a result of age and wear and tear. Different items within a property have different rates of depreciation based on the effective life of the item and when the asset was acquired. The ATO determines this.
- Capital Works depreciation – this covers aspects of the dwelling, including constructions, extensions, alterations and improvements of a structural nature. It includes work undertaken such as extensions, renovations, or any additions. Capital works depreciation is a particularly complex area and is not as easy as simply claiming a capital works deduction. Depreciation rates can vary depending on the type of building works and when construction commenced.
Qualified inspectors, have the expertise and knowledge to know which items are depreciable, the rate at which they can be depreciated and how savings can be made.The ATO’s full list of depreciable assets (more than 200 items) can be found at www.ato.gov.au.
Yes. Property Ally conducts physical inspections of all properties under evaluation. Property Ally has the expertise and knowledge to know which items are depreciable and how savings can be legitimately achieved.
No. A depreciation report is valid for the lifetime of the investment. However, it is recommended you update your schedule if capital works are undertaken on the property or assets in the house are replaced.
Yes, Property Ally is part of a network with offices in NSW, Victoria, Queensland, South Australia, and Western Australia. Our qualified inspectors make regular visits to country areas. To minimise costs to owners and investors, regional visits are coordinated based on the number of requests received for a particular area.
Even if your property was built prior to the qualifying date for capital works deductions (i.e. 17 July 1985 for residential, properties) you will most likely be entitled to some deductions. These could include the cost of improvements prior to your purchase (for example, concreting, painting, renovations), and the value of the plant and equipment items within the property, such as blinds, carpets, stovetops, hot water systems, etc.
Having a physical inspection of your property allows our qualified inspectors to ensure we record all legitimate entitlements within your report. Our inspectors have the expertise to ensure your depreciation schedule lists all assets and costs correctly.
A depreciation schedule allows you to ensure you claim the full amount of tax back on your property when completing your tax return. Schedules are ATO compliant, you can not only claim guaranteed entitlements for your tax return, but you can also ensure you maximise your entitlements to ensure the biggest return possible.
The 2017 Federal Budget has brought about some changes that will affect any investor holding or thinking of buying, residential properties.
The Federal Budget changes only affect the plant and equipment category in residential homes.
From July 1, 2017, the Government will limit plant and equipment depreciation deductions to outlays actually incurred by investors in residential real estate properties.
.What does this mean? You can only claim depreciation on fixtures you installed yourself. If you’ve purchased a ‘second hand’ property from another investor after May 9th 2017, you’re no longer able to claim plant and equipment items inside
NO. Property Ally inspect ALL properties to ensure the correct and maximum depreciation is claimed for you. Also as Property Ally reports are compiled by Quantity Surveyors, the construction costs of all eligible buildings and pre purchased renovation/extensions are calculated and claimed.
When you receive the completed report, forward it onto your accountant so they can incorporate it into your tax return to help off-set income produced. This reduces the tax payable.
Before. This allows you to claim the items, i.e. plant and equipment , you purchased with the property (as long as you have held them for a “reasonable amount of time”) up to the point of replacement and then you can write-off the items that are being deposed of and replaced.
Tax deductions are calculated from the date of settlement. Having a report completed soon after settlement will allow deductions to be claimed immediately and before any modifications or additional structures/ assets added.