Put simply depreciation increases an investor's cash return for residential and commercial property. One of the main challenges for investors is managing cash flow for their investment. Tax depreciation schedules assist in maximising your cash return from an investment property. As a building gets older and items within it wear out they depreciate in value.
Depreciation is a noncash deduction meaning you do not need to spend any money to claim it. First National recommends BMT Quantity Surveyors for your depreciation needs. Above were some examples from their website showing the deductions made on each property. We strongly recommend you take a moment to visit their website, it has a whole range of information including case studies to show how you can improve your investment cashflow. Click here to visit the BMT website.
In order to claim depreciation and capital works deductions property investors generally need to enlist a specialist Quantity Surveyor to complete a comprehensive capital allowances and tax depreciation report or schedule. When completed, a tax depreciation schedule outlines the deductions available for both capital works and plant and equipment items on an income producing property and is used each financial year when preparing tax returns.
A BMT Capital Allowance and Tax Depreciation Schedule includes a detailed outline of two major components:
Plant and equipment assets (division 40): Includes assets which can be easily removed from the property. The asset’s condition, quality and effective life all determine the allowances available.
Capital works deduction (division 43): Is the deduction for the building’s structure. Available on properties constructed post 1982 (non residential) and 1987 (residential).
Below are some more examples from the BMT website to show the value in their service.