Tax time is here – Are you paying too much tax ?
Do you own or have you bought an investment property in the past financial year?
Or… have you recently refurbished, altered or extended your investment property in the past financial year?
Or… do you own an investment property but have never claimed depreciation in the past?
Or… own any property including commercial, retail, industrial, residential, pubs, clubs, sporting – we are experts in them all.
If your answer is yes to any of these questions then you may very well be paying too much tax on your income if you don’t claim your depreciation deductions. Continue reading
Tax Q&A: Your Tax Questions on Depreciation Schedule and Tax Return Claims, Answered
Q: I have just bought an investment property, which I plan to renovate in about six months’ time. It was leased when I bought it, and the lease runs out in October, so I plan to renovate it when my tenant moves out.
I’m not sure whether I should get a depreciation schedule done now so I can make a claim on my tax return this year, or wait until I’ve completed the renovation(and will therefore have a much better depreciation schedule)?
It seems like I will miss out on tax deductions this year, but I don’t want to spend the money on getting two depreciation reports. Which would be the best course of action?
- Thanks, Wayne
A: There are a few different things to consider here, starting with your initial acquisition.
As the property is income-producing, then you are able to claim allowances, as you point out. To get the benefits available to you, you should prepare an initial schedule that details all
the deductible items as at the time of settlement.
Deductions would be for depreciable plant under Division 40 and for structural items under Division 43, which will only apply if the building is young enough. You can then claim these allowances from settlement up until the point when either the property is no longer earning income or you decide to commence the renovation.
Having this initial schedule will provide you with the base document for your deductions going forward and also the base document to alter after you have completed the renovations. Continue reading
