With the new tax year fast approaching, many taxpayers will be seeking to boost their cash flow due to the dire economic consequences of the coronavirus pandemic. Only last week, the Federal Treasurer Josh Frydenberg confirmed Australia is now in a recession, ending 29 years of uninterrupted economic growth. Boosting cash flow is therefore critical in these challenging economic times and a simple way to do this is to ensure that generous tax depreciation benefits are fully claimed. Individual Australian property investors are potentially missing out on thousands of dollars in potential tax deductions each year by not claiming their full tax depreciation entitlements.
Many Australian property investors may not know that a tax depreciation report undertaken by a professional tax depreciation company can identify hundreds of items in an investment property for which you can claim legitimate depreciation benefits.
As we about to enter a new tax year, owners of investment properties in Australia can significantly boost their cash flow by claiming these tax deductions on a large number of various household items through depreciation benefits.
Some of the legal, yet often neglected deductions include:
- Pumps attached to spa baths and Swimming pool filtration systems
- Free-standing spas
- Water tanks
- Built-in coffee machines
- Children's cubby houses qualify as valid deductions.
- Solar Panels
- Clothes Lines
- Security Systems
It may also surprise many property investors that even garden gnomes can be depreciated for tax purposes. Under taxation ruling, TR2006/15 garden gnomes can be depreciated for tax purposes as plant over their economic life. The tax benefits associated with negative gearing can be very significant with DEPPRO clients achieving tax benefits obtained through depreciation equivalent to 60% of the total purchase price of the property. In some cases, these tax benefits can total $300,000 based on a purchase price of $500,000. To qualify for these legitimate tax deductions, an investor must have a fully compliant tax depreciation company undertake an onsite inspection of the property and then compile a depreciation report based on this inspection.
Estimates of tax depreciation benefits for an investment property made from an office desk will not be accepted by the ATO.
Depreciation is a complex area of taxation that requires a professional company to undertake a depreciation report because of constant changes in rules. The ATO is now taking a more aggressive approach to tax deductions made by residential investors and has asked a large number to provide more details about their claims relating to property investment. Property investors should check that the company undertaking their tax depreciation schedule is a member of The Australian Institute of Quantity Surveyors (AIQS).
Employing a company who is a member of AIQS such as DEPPRO gives protection to consumers that their tax depreciation report complies is completed in a professional manner.