A tax depreciation schedule itemises the tax deductions claimable for depreciation of an investment property. It lists the amounts you can claim each year (for 40 years) for the wear and tear of capital works – the actual building – and the wear and tear of plant and equipment – elements within the building such as furnishings and electrical appliances.
A depreciation schedule can add significant value at these four stages of the property investment process:
- Before you buy
A savvy investor will evaluate a potential property investment using a full financial picture: potential income, expected expenses and tax deductions claimable – including deductions for depreciation. If you’d like to know whether depreciation deductions will add considerably to the profitability of your potential investment, arrange for a Quantity Surveyor to complete a Tax Depreciation Estimate. This document will outline the deductions you can expect to claim, helping you make a more educated investment decision.
- After settlement
Claiming allowable depreciation deductions should be on the “to do” list for every investment property. Ideally you should have a Quantity Surveyor inspect your property and prepare a tax depreciation schedule as soon as possible after settlement. They can then forward the document directly to your accountant and you’ll be claiming every depreciation dollar you’re entitled to. It couldn’t be easier.
- When planning renovations
Investment property renovations may incorporate “scrapping costs” – the writing off of old fittings, fixtures and appliances. A Quantity Surveyor can advise whether your new kitchen, extension or property makeover presents an opportunity to increase the depreciation deductions claimable on your property. It’s definitely worth asking.
- When preparing to sell
A professionally prepared tax depreciation schedule can be a valuable marketing tool when selling any property. Potential investors will consider location, capital growth, return on investment and the tax implications of purchasing your property. Why not showcase your property by presenting a full financial picture to potential buyers? It may be key to securing the sale price you’re after.