If you've bought an investment property, it's worth knowing that you can save tax on depreciation. But understanding how a depreciation schedule works can be confusing for owners who don't know the first thing about tax savings on a property. This guide shows you how you can save tax with the right depreciation schedule. A quantity surveyor is a qualified professional who will compile your depreciation schedule, which cannot be put together by your existing accountant.
Understand Depreciable Items Within The Investment Property
Seasoned property investors will probably know everything there is to know about depreciable items, but a quantity surveyor will continue to add value because some things could be missed by the naked eye. Just like a car depreciates, items within the property can be claimed under a depreciation property. For instance, items like carpets, flooring, fire alarms, benchtops, shower screens and more can be claimed as part of depreciating costs, which helps you save tax in the long run. Any renovations and the property itself will also be included in the depreciation schedule. White goods, electrical units and furniture are also included in the depreciation schedule under the plant and equipment category.
Organise A Depreciation Schedule Just After Settlement
It's important to hire a quantity surveyor to undertake the depreciation schedule just after you buy a new property and before any prospective tenant moves in to maximise the savings you can earn from the declining value of the home. The surveyor will conduct a comprehensive site inspection and will document all depreciable items within the property to make an accurate assessment of declining value. This ensures that you don't end up missing out on any possible tax deductions, and can also be used as proof in case the Australian Taxation Office (ATO) audits you.
Know That Depreciation Schedule Costs Are Tax Deductible
Many investors hesitate to hire a quantity surveyor because they fear the cost involved, but many fail to understand that the fee they pay is completely tax deductible – making this an investment worth its weight in gold. The actual cost of a depreciation schedule will vary based on your property type, size, location, age and other factors. Many professional surveyors offer obligation-free quotes, but be wary of the cheapest price. At the end of the day, you'll want a seasoned professional who can help you maximise tax savings, even if you have to pay a little more.
Getting a depreciation schedule can help you save tax on your investment property, so make sure you get it right with these tips.