Are you making the most of investment property tax deductions?
As an investor, you might not realize there are investment property tax deductions you could be making on smaller items within your property. That could mean valuable savings at tax time. However, there’s a good chance you already claim some depreciation on your investment property.
Tax isn’t an area where you should muck around. It’s important to get this right. Both so to have a robust investment as well as, to keep all the right boxes ticked with the ATO. Work together with a professional and start making the most of your investment property tax deductions – big and small.
You might be able to claim the depreciation for your investment property – that’s fixtures or items that can be easily removed. Namely, of the ‘plant and equipment nature. And, the structural elements of your building. Which are ‘capital works’ items.
‘Plant and equipment’ means items like hot water systems, carpets, stoves and air-con systems. Meanwhile, capital works deductions can be claimed for the historical construction costs of the building including wiring, doors, and even tiles and toilets.
Apartment investors take note – you can also claim a stake in the depreciation of common facilities like lifts, pools and gyms.
Investment Property Tax Deductions cont
Paying closer attention to detail could see you much better off in the long run.
It is wise to invest in a depreciation schedule for your investment property.
A depreciation schedule drawn up by a professional quantity surveyor will help you make the most of depreciation claims while sticking to the rules. The Tax Office does offer online guides for depreciation claims but it’s a complex area and a rough estimate won’t meet their stringent requirements.
Don’t overlook the less obvious investment property tax deductions.
There may be more things you can claim on tax than you realize. Quantity surveyors find the top five deductions most overlooked by investors aren’t the big-ticket items. Not only, hot water systems or garage doors but can actually include:
Freestanding garden sheds
Solar garden lights
Tennis court nets.
*Investment property tax deductions that are also often missed are freestanding bathroom accessories. Furthermore, door closers, garbage bins, exhaust fans, synthetic lawns, roller door motors, and swimming pool cleaning systems.
You might be able to deduct items you didn’t even know existed.
Every little bit counts.
Many investors remember to claim depreciation on larger items.Things like carpet and washing machines – but it pays to sweat the small stuff.
It is estimated that claiming the cost of smaller household assets such as shower curtains, smoke alarms and lawnmowers in your rental place can actually increase the cash flow generated by the property by around 15 per cent.
Finally, the cost of having the schedule drawn up can also be claimed on tax. You may also be able to go back and amend tax returns for previous years if it turns out you’ve underestimated prior year’s depreciation costs.
This article is prepared based on general information. It does not take into account individual financial objectives or needs and is not financial product advice.
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FMG Wealth Strategists – Adelaide – Investment Property Tax Deductions