Top 10 things for Depreciation Report
Many Australian property investors may not know that a tax depreciation report undertaken by a professional tax depreciation company following an onsite inspection of their property can identify hundreds of items in an investment property for which you can claim legitimate depreciation benefits.
As a result, the owners of investment properties throughout Australia can significantly boost their cash flow by claiming these tax deductions on a large number of various household items through depreciation benefits.
A physical inspection is required so these items are properly identified rather than a desktop assessment which may overlook claimable items for tax deprecation purposes.
That is why property investors should check first if the tax deprecation report being prepared by a tax depreciation company will actually involve a physical inspection to identify all possible tax depreciation benefits on items in their property as they can vary from property to property.
TOP TEN OVERLOOKED TAX DEPRECIATION ITEMS
- Clothes lines
- Solar panels
- Security systems
- Swimming pool filtration systems
- Retaining walls
- Cubby houses
- Garden gnomes
- Free standing spas
- Water tanks
- Car parking and recreational areas (apartment complexes)
Many investors in Australia totally underestimate the number of items that can be depreciated for tax purposes and this comprehensive list can even include garden gnomes, cubby houses and if they own an apartment, the common areas such as car parking and recreational facilities.
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 and investors need to double check that their tax depreciation report is based on a physical inspection of their property.
This is a simple check but one which could ensure that their client does not have to pay substantial penalty fees imposed by the ATO because the tax deprecation report is not compliant.
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 added protection to consumers that their tax depreciation report is compliant and is completed in a professional manner.