Unfortunately many investors still overlook the benefits of claiming tax depreciation on their investment properties. Some key facts to keep in mind include:
- Ability to back-claim for previous years – if you failed to claim depreciation on your investment property in years past, the great news is you can still claim at least 2 years (in some cases 4 years) worth of depreciation by amending previous returns. This has the potential to boost this years tax return by thousands of dollars!;
- You don’t need to have spent anything on the property – tax depreciation is a paper loss, attributed to the fact that your property (the building and its inclusions) are ageing over time. You don’t need receipts, or costs, you just need a report from a qualified quantity surveyor;
- You can claim work you didn’t do – if you bought an investment property that had improvements or additions completed prior to your purchase, you get to claim the depreciation on those works. The great news is, as they are newer, they still have much more depreciation left in them and will generate higher deductions for you to claim;
- You can claim scrapping for items you threw out – if you have done some work on your investment property, such as replacing a kitchen or bathroom, flooring, or roof etc, not only are the new items you have installed depreciable, but you can claim the residual value on the items you took to the dump! You may think there is no value in those items, but many items are attributed new effective lives when you purchase the property and hold more “scrapping value” than you think. Don’t miss out on that extra cash!
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