If you’re an investor who plans to lease out the property, buying a brand new property off the plan allows you to maximise the tax deductions available to you via depreciation.
Depreciation is one of the best tax breaks available to property investors and can amount to significant savings.
A quantity surveyor prepares a depreciation schedule which makes it far easier for you to claim deductions on your property fittings and fixtures at the end of the tax year.
Increased depreciation means your holding costs will be much lower, as the taxman is covering a bigger portion of your investment property expenses.
Generally speaking, there are two types of depreciation allowances available to investors:
Building allowance is the deduction available on the building structure (for example, concrete and brickworks) and is commonly known as the building write off.
Plant and equipment, on the other hand, is the allowance for removable items within the building itself. Things like ovens, dishwashers, and carpet, and even your garbage bins.
A depreciation schedule is a detailed document that includes:
A breakdown of all building allowance costs.
A breakdown of all plant and equipment costs.
The rates at which you can claim different items and the effective lifespan estimate of each item.
A breakdown of how much you can claim per annum based on the financial year end.
A good report will break down your plant and equipment depreciation by two methods: the diminishing value method and the prime cost method, which give you different options for claiming depreciation on your assets depending on your needs.
The cost of having a Depreciation schedule prepared is 100% tax deductible