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How investors can save thousands this October 31

Investors who self-assess or estimate costs based on their own judgement when lodging their tax return are potentially missing out on thousands of dollars, according to BMT Tax Depreciation.

With the October 31 tax deadline fast approaching, It’s common for investors to self-assess or estimate costs based on their own judgement when lodging their tax return.

However, investors who do so are potentially missing out on significant depreciation deductions by incorrectly evaluating their claims.

Depreciation is one of the most lucrative tax deductions because it’s a non-cash deduction, meaning investors don’t have to spend money to be eligible to claim it.

The Australian Taxation Office (ATO) allows owners of any income-producing properties to claim depreciation for the building’s structure via capital works deductions and for the plant and equipment assets contained within the property.

In residential properties, capital works deductions must be depreciated at a rate of 2.5 per year for a maximum of forty years, while eligible plant and equipment assets must be depreciated over time using an effective life supplied by the ATO.

Read more about tax depreciation on the BMT Tax Depreciation website

Property investors who choose not to seek expert advice and self-assess deductions put themselves at risk of using the wrong depreciation rates and classifying items incorrectly.

As a result, they could be missing out on thousands of dollars’ worth of deductions.

Quantity Surveyors are recognised under Tax Ruling 97/25 as one of the few professionals with the expert knowledge necessary for estimating construction costs for the purposes of calculating property depreciation.

A Quantity Surveyor can assess a property and provide a comprehensive depreciation schedule which outlines depreciation deductions accurately.

A tax depreciation schedule is the best way to ensure the biggest tax refund possible and can act as evidence should the ATO complete an audit of a claim.

There is no item too small to consider including in a schedule.

Low-cost assets and low-value assets all add up to maximise depreciation benefits.

If an asset has sufficiently low value, legislation allows it to be written off much faster or even claimed in full immediately.

A BMT Tax Depreciation Schedule covers all deductions available over the lifetime of a property (forty years) to maximise cash flow.

In FY 2018-19, BMT found residential clients an average of almost $9,000 in first-year tax deductions.

To find out more, Request a Quote or speak to the team at BMT Tax Depreciation.

Source: The Real Estate Conversation 8th October 2019

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