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Trendy Innercity Queenslander Delivers Huge Depreciation Rewards

With the end of the financial year, property investors need to work out what they can claim and ensure they have accurate records of purchases and building costs.

It’s easy to forget about the many items you have purchased for your rental property, and costs associated with major capital works. You will be surprised how much depreciation you can claim for both the Building and Plant & Equipment assets. Let’s look at a renovated Queenslander style unit complex, in the trendy inner-city suburb of Spring Hill in Brisbane as an example.  

In this case, our client purchased an established property with four self contained apartments, badly in need of updating. As the property is considered second hand or old, deductions are only eligible on capital works and new assets. 

After major structural works were carried out, plus purchases of various items to upgrade the units for rental, our client was able to claim up to $19,960 in the first full financial year, for Division 40 and 43. 

Over the next 40 years, our client or any future investors can claim up to $284,124 in depreciation allowances, based on construction costs and new assets.

These assets included:

  • air-conditioning, ceiling and ventilation fans
  • blinds, carpets, plus other floor coverings
  • fire control and alarm systems, such as smoke detectors
  • kitchen items such as dishwasher, exhaust and range hoods, ovens, stoves
  • washing machine

Other expenses involving repairs or maintenance, plus costs such as Council rates, loan interest, and property management fees can be claimed within the year they occur with your tax return,  

The underlying message is to keep all records of purchases or expenses associated with your rental property. Remember only major capital works such as extensions, or renovation of kitchens, bathrooms, plus any new equipment purchased, are considered eligible depreciation deductions.

You will need to provide your accountant and the Australian Taxation Office with a detailed depreciation schedule, prepared by a Registered Tax Agent, or Quantity Surveyor, when you submit your taxes.  

The value of a comprehensive and accurate depreciation schedule far outweighs the cost of the report. And, if there are no changes to your property, you can use this report, again and again. 

For further information or help contact our highly experienced Property Tax team.