We’ve recently had several property investors come to us with an assumption that their investment properties constructed prior to 1984 will not allow any significant depreciation for the cost of construction. This is not entirely correct and we fear there are too many investment property owners failing to obtain all the benefits of the allowable deductions for their property.
Consider the two types of property write-offs; firstly capital works, and secondly plant and equipment depreciation. While it is correct that the construction costs or “capital works” of properties constructed before August 1984 may not be able to be depreciated, typically older properties have undergone some kind of renovation or upgrade in more recent times. The costs of the upgrades may be depreciable. Secondly, many investors underestimate the advantage of depreciating plant and equipment items such as floor coverings, lifts, air conditioning etc. When a new owner purchases an older property these items can be evaluated and depreciated for the benefit of the new owner.
We have seen the benefits time and again of obtaining a tax depreciation report from a quantity surveyor. Typically the costs of having this study conducted are paid for several times over in the first year through allowable deductions. We can assist clients in connecting with a qualified quantity surveyor to produce a report for their property, and then to apply the depreciations to their advantage in their tax returns. Contact us to find out more.