What a write-off! Handy tips for investors
Get the details right and there will be no hassles at tax time. Photo: Getty
It’s tax time … and that means time for property investors to do their homework.
When it comes to residential property, investors can claim depreciation for plant and equipment – that is, fixtures or items that can be easily removed – and also for capital works, which are the structural elements of the building.
Plant and equipment covers things like hot water systems, carpets, stoves and air-conditioning systems.
Capital works deductions can be claimed for the historical construction costs of the building, including wiring, doors, and even tiles and toilets.
Apartment investors take note, you can also claim a stake in the depreciation of common facilities such as lifts, pools and gyms.
None of this will be especially new to seasoned landlords. However, many property investors continue to overlook depreciable items. That can mean missing out on valuable tax savings.
Five most overlooked claims
Quantity surveyor BMT Tax Depreciation has put together a list of five most-overlooked items that investors can claim depreciation on.
They are:
- Freestanding garden sheds
- Solar garden lights
- Intercom systems
- Ceiling fans
- Tennis court nets
But wait, there’s more
Other items that are frequently overlooked for depreciation include freestanding bathroom accessories, door closers, garbage bins, exhaust fans, synthetic lawns, roller-door motors, and swimming pool cleaning systems.
Sweat the small stuff – it adds up
Many investors do remember to claim depreciation on larger items. But it also pays them sweat the small stuff.
It’s estimated that claiming the cost of smaller household assets – such as shower curtains, smoke alarms and lawnmowers – in your rental place can increase the property’s cash flow by about 15 per cent.
A formal depreciation schedule is a good investment
As with all aspects of tax, it is important to get things right.
The Tax Office does provide online guides for depreciation claims. But it’s a complex area, and a rough estimate of your depreciation claim won’t pass muster with the tax man.
Having a schedule drawn up by a professional quantity surveyor will help you to make the most of depreciation claims, while still sticking to the rules.
Furthermore, the cost of having the schedule drawn up can normally be claimed on tax. You might even be able to go back and amend tax returns for previous years if it turns out you’ve underestimated depreciation costs in earlier years.
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