Depreciation Schedules
Why do I need a Depreciation Schedule and how will it help me?
A depreciation schedule will be necessary to maximise your allowable tax deductions on any property that you own as an investment. When claiming depreciation on the building and fittings the ATO insists that you have a depreciation schedule prepared by a licensed Quantity Surveyor.
The purpose of the report is to provide an independent analysis of the Capital allowances available to the investor under division 40 and 43 of the ITAA 1997.
There are 2 different methods of calculating depreciation these are as follows:
- The Diminishing Value Method is where the claim is calculated as a percentage of its residual value after writing down it's previous value, in short you can claim a larger amount initially but as the years pass the claimable amount diminishes.
- The Prime Cost Method is a fixed value calculated as a percentage of the items original value, there for your claim amount is less initially but does not reduce for the life of the item.
API helps investors with all areas of investing in property. We will arrange for our affiliate Licensed Quantity Surveyor to contact you shortly.
Simply fill out your details and the subject property post code on the following form.
Whilst our head office is in Melbourne, we service investors in nearly every state in Australia including Victoria, NSW, Queensland, South Australia, Western Australia and Tasmania. Most areas within these states are catered for such as Melbourne, Sydney, Adelaide, Perth and Brisbane.
This all sounds great but remember if you sell the investment property the ATO will charge Capital Gains Tax based on the written down value of the property.
It must be remembered that to be able to calculate your tax benefits accurately you must have a Depreciation Schedule prepared by a licensed quantity surveyor. The ATO will not accept estimates prepared by individual investors.
The cost of a Depreciation Schedule will vary depending on the size of the property and whether the Surveyor is doing one or many apartments in the complex, but a rule of thumb is to allow about $500 plus GST for a standard residential apartment.
Amendments to Section 262A (4AJ and 4AJA) of ITAA 1936
- Requirement of builder/developer to furnish purchaser with depreciation schedule within 21 days of written request - penalty of non compliance is 30 penalty units ($3,300)
- If non compliant builder/developer have a further 14 days upon written request - penalty of non compliance 250 penalty units ($27,500)
- If this occurs you can forward your correspondence to the ATO and builder/developer will be penalized and prosecuted.
If you have any questions regarding depreciation schedules call Australian Property Investor now on 03 9533 2255 or email us for a FREE, No Obligation consultation.
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