Ten Property Tax Depreciation Facts You Need To Know….
- All residential properties used to generate income are eligible for depreciation allowances. How much you can claim will depend on the age of the building and the assets.
- Tax depreciation is the highest form of non cash deductions you can claim on your personal income tax return for residential investment properties.
- Depreciation allowances enable property investors to reduce taxable income
- The depreciation schedule provides investors with certainty of tax deductions to manage cash flow.
- 2.5 percent of the construction cost for a property can be claimed as capital allowances (Division 43) on new builds for up to 40 years.
- Capital Allowances on second-hand or older properties are dependent on the age of the building. Depreciation on capital works or renovations to the building can be claimed.
- Plant and Equipment Allowances (Division 40) is applicable to assets such dishwashers, ovens, cook tops, range hood, blinds, curtains, alarms, underfloor heating, pool pumps and filters, furnishings and much more. The depreciation value depends on the quality, age and condition of these assets.
- Depreciation can be claimed on a portion of the total amount for shared areas in residential complexes. These include lifts, car parks, car stackers, foyers, pools, gyms, saunas, tennis courts and more.
- Legislative changes impacted plant and equipment allowances (Division 40) on second hand or older properties purchased after 9 May 2017 only. Tax allowances are still applicable for capital works and purchases of new plant and equipment.
- Fees for completion of Depreciation Schedules are 100% tax deductible. These should be provided by Registered Tax Agents, nominally experienced and qualified Quantity Surveyors.
If you need help with understanding tax legislation concerning your investment property, our highly experienced and knowledgeable Property Tax team are happy to help.