As a property investor, chances are you have already engaged the services of an accountant. But have you got a good property surveyor?
According to BMT Tax Depreciation chief executive Bradley Beer, about 70-80% of landlords aren’t making full use of depreciation in their tax calculations. This means as a property investor, you could be leaving thousands of dollars in the ATO’s pockets that is rightfully yours.
Just as your car or household items depreciate over time, so does your investment property. It makes sense to only pay tax on the true value of your investment.
What can I claim depreciation on?
There are two areas you can claim depreciation on your investment property:
1. The house itself, and
2. The plant and equipment.
Depreciation can be claimed on the costs of construction or repairs, but you may not have known you can also claim depreciation on items such as dishwashers, air conditioners, carpets and blinds. Essentially, if you are responsible to pay for something, you may be able to claim depreciation on it.
How do I claim depreciation?
In order to claim depreciation on your investment property, you need to complete a depreciation schedule. However, you can’t do this yourself; you need to employ a quantity surveyor to assess your property and complete the schedule.
Your property surveyor will complete the schedule for you, which you can then submit to the tax office.
When choosing a property surveyor, make sure they are registered with the appropriate authority in your jurisdiction so your depreciation schedule is legitimate.
Is it worth the hassle of claiming depreciation?
By way of example, it is worth using the ATO’s decline in value calculator for a rough guide. Although this will not give you a 100% accurate figure, it can be used as a guideline to show you just how much money you could save. And when it comes to investment property, the amount of money could be significant.
This is particularly important for those who invest in property to save for their future. If your superannuation was being drained by excessive fees, you would take it seriously and change providers. Why would you not do the same with your investment property? If you found out you were paying tax amounts you shouldn’t have to pay, would you continue paying thousands of unnecessary dollars, or would you make sure that in future the money stayed in your pocket?
If you are not claiming depreciation on your investment property, you are paying too much tax.
The amount of depreciation you can claim on your property declines over time, so it makes sense to get a property surveyor now before you miss out for another year.
The good news is that there are many reputable property surveyors in Adelaide to choose from. Contact your property manager today and ask if they can refer you to a surveyor. Alternatively, find one that offers a guarantee – many will refund your fees if you don’t save twice as much. And remember that the property surveyor fees themselves are also 100% tax deductible.
Don’t take yourself for a ride this tax time.
You’ve got a good accountant; get a good property surveyor and stop paying excessive tax!