The October 31st deadline for lodging your 2018 tax return is nearly upon us. With just under two weeks to go, if you are a property investor, you still have time to compile a Tax Deprecation Schedule to lodge with your return.
“Property Depreciation is a legitimate deduction that investors can claim against their taxable income, yet countless Australians miss out on depreciation claims each year,forfeiting thousands of dollars in potential tax savings in the process,” said Rawlinsons (W.A.) Director Niall McAree.
Unlike most tax deductions, property depreciation is a ‘non-cash expense’, meaning you don’t actually need to splash out the cash every year in order to make a claim; however, you do need a valid tax depreciation schedule.
The Australian Taxation Office has identified that a Quantity Surveyor is the profession properly qualified to produce a legal Property Tax Depreciation Schedule. Accountants,by Australian tax law, are no longer authorised to prepare or estimate construction costs.
“With the 2017 changes to rental property depreciation deductions, there is some confusion among property investors in regards to what can now be claimed. It’s important to remember that the change in legislation only affects second hand residential properties,” explained Mr McAree.
“The good news is that Capital Works,or Division 43, has no change to legislation, which means investors can still claim deductions for the immovable structural elements of a building, such as; ceilings, foundations, walls, swimming pools, windows and toilets. The changes only apply to Division 40, Plant and Equipment, which includes assets that are not part of the properties structure, like; carpets, ovens, dishwashers, blinds and smoke alarms,” concludes Mr McAree.
Although it is past June 30, you can still have a tax depreciation schedule compiled by a qualified Quantity Surveyor and use this to submit with your 2018 tax return. Your fee can be claimed in the current financial year, but the Tax Depreciation Schedule can be used to lodge past years returns and is valid for the life of the property.