Fixed price Depreciation Report on Investment Properties ORDER NOW

NBtax Tax Bites

image description

Not all Depreciation Reports Are the Same

Congratulations, on purchasing your investment property. Now that your property has settled and is available for rent, you’ll be seeking to gain from any tax benefits. To take advantage of depreciation allowances, you’ll need to obtain a depreciation report. This will enable you to offset rental income and reduce your personal income tax. Sounds great, right? But how do you choose a reputable company to prepare your depreciation report, after all, aren’t all depreciation reports the same?

No, depreciation reports can vary significantly, depending on the expertise of the provider and their due diligence in reviewing the property, and applying the tax rules to each taxpayers’ case. Worst case scenario, you’ll miss out on valuable depreciation deductions, or your report will not be compliant with the Australian Taxation Office, and you’ll risk penalties. 

To help you, we’ve compiled this checklist of the top criteria you will need to consider when choosing a reputable provider of depreciation reports.

Checklist for Choosing the Right Provider

1. Has Proper Qualifications and Meets Compliance

Steer clear of any provider who is NOT a member of the Australian Institute of Quantity Surveyors (AIQS) and a Registered Tax agent. Our NBtax team comprises experienced Property Tax Analysts and Quantity Surveyors who have a thorough knowledge of tax legislation. Each depreciation report is thoroughly checked to ensure it meets the Australian Tax Office’s high compliance standards. We also have a proven track record in the industry based on over 30 years of preparing depreciation reports for private investors and property developers.  

2. Conducts Site Inspection

Does your property require a site inspection? In most cases, the answer is yes, unless it is still under construction or you have detailed plans. Our Property Tax Analysts and Quantity Surveyors have detailed lists of standard and nonstandard items to inspect for each property. Their job is to accurately record the specifics of the items and their conditions as well to determine their effective life. Where our Quantity Surveyors have been involved in the construction of a residential complex, we have all the costs detailed, and personal inspection may not be required.

3. Checks Common Areas / Strata Inclusion

Property investors who purchase in residential complexes can claim a share of common assets. With developers looking to attract high end property owners, and investors, many complexes include entertainment areas such as gyms, tennis courts, pools, cinemas. Not only can you claim the Building Depreciation Allowance (Division 43) calculated at a rate of 2.5 percent for these assets, but you can also claim for structural improvement works such as fencing, hard landscaping, driveways and pergolas. You can also claim depreciation on Plant & Equipment assets (Division 40) associated with these including items such as pumps, filters, nets, screens etc. Depreciation on other shared items such as lifts, security systems, car lifts and storage sheds can be claimed as well. 

4. Checks for Furniture Inclusions

Where furniture is provided for the use of tenants (especially in holiday homes), you can request this to be included as part of your depreciation report. Outdoor furniture in common entertainment areas should be calculated as a percentage of shared assets.

5. Reviews Post Build Improvement Works

In second-hand or older properties, you can claim depreciation allowances on the building, and for any major renovations or capital works. In these cases, it’s important that all documentation such as builder’s contracts, plans and invoices are checked.  

6. Calculating Accurate Depreciation Values

Our NBtax team have a strong background in construction. We’re able to draw on this experience, and the expertise of our Quantity Surveyors to determine accurate building costs and maximise the depreciation entitlements. We’ll also take the time to research the costs of assets such as electrical appliances, white goods, carpets, blinds and air conditioners to determine their value. 

Depending on the age of the property, and the assets, you’ll find a depreciation report will deliver you thousands of dollars in tax benefits. But it’s imperative you choose a reliable, trustworthy and accredited provider like NBtax to prepare your depreciation schedule. 

Remember, to compare like providers with the same qualifications and level of expertise. Always, check the fine print. After all, the “devil’s in the detail”, especially when it comes to calculating depreciation values and interpreting tax legislation. 

Order your compliant and comprehensive depreciation report with us today.