Property tax depreciation is a legitimate deduction against an assessable taxable income, maximising returns for property investors. So, in laymen’s terms, if you are generating income from an investment property, you can claim back the decline in building value, or asset, via a tax deduction on capital works (Division 43) and, in some cases, plant and equipment (Division 40).
The Australian Taxation Office has identified that should your investment property be built after 1985, 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.
Rawlinsons (W.A.) experienced Quantity Surveyors are highly trained, holding Bachelors of Science in Construction Management and are members of the Australian Institute of Quantity Surveyors. Our team are experts in the valuation of construction costs, with the ability to accurately estimate construction costs where the information is not readily available.
Please read below for details on how we can help to maximise your cash return on your investment.
As the creators and editors of the extensively circulated Rawlinsons Australian Construction Handbook and Rawlinsons Construction Cost Guide, our staff have access to the most comprehensive and current library of construction pricing information and data sources in Australia.
There are two components;
Division 43: Capital Works Allowance
Capital Works Allowance is calculated on the building construction cost at the time it was built, not the purchase price you just paid for your investment property.
Division 40: Depreciating Assets - Plant and Equipment
Each asset has its own diminishing life, as set out by the Australian Taxation Office, depreciation is calculated using this effective life.
Please note, in November 2017, a new Australian rental property bill was passed. The new legislation does not allow depreciation deductions for previously used plant and equipment in second hand rental residential properties if the contracts were exchanged after the 9th May 2017 at 7.30pm. Should an investor purchase new plant and equipment after the 9th May 2017 at 7.30pm, they can claim a deduction over the effective life of the asset. Investors who purchased a second hand property before the 9th May 2017, at 7.30pm, are not subject to the changes and can continue claiming as before.
Simple, it saves you money, maximising your cash return each financial year.
If your residential investment property was built prior to 1985 you can only claim depreciation on Division 40, Depreciating Assets, if construction commenced after 1985, you can claim Division 43, Capital Works Allowance and, until the 9th May 2017, any Division 40, Plant and Equipment. Please refer to the Division 40 notes above on the changes to legislation passed in November 2017.
Commercial investment properties have varied dates applicable, please contact us for clarification.
The lifetime of the house, it will only need updating should you perform renovations or purchase new assets for your investment.
Each quotation is customised so please contact our office for an obligation free, written quotation. Our fee is 100% tax deductible.
Contact our office today; we can have the ball rolling for you ASAP.
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Rawlinsons (W.A.) Quantity Surveyors and Construction Cost Consultants are highly trained professionals and experts in estimating construction costs. We cover the full range of cost management services from initial cost planning through to contract administration, as well as ancillary services such as Reserve Fund Forecasts (10 Year Maintenance Plans), Insurance Replacement Valuations and Tax Depreciation Schedules.
Industry leaders, Rawlinsons (W.A.) are the proud creators of the Rawlinsons Construction Cost Reference Books. The cornerstone of cost estimating, our books have been providing Australia with reliable, trusted information for nearly 40 years. Head over to Rawlhouse Publishing, for more information.
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