Maximise Your Claims from Your Investment Property

10th June 2024

Finance & Budgeting Pre-Construction Investor

This article explores how property investors can maximise tax depreciation claims to save thousands of dollars annually. It covers quantity surveyor reports, scrapping benefits, and key strategies to reduce taxable income.

Maximise Your Claims from Your Investment Property

Investing in property can be a great way to build wealth, but many investors leave money on the table by not taking full advantage of tax depreciation. In this episode of the Home Building Hub podcast, Colin Bischof and Darren Brennan speak with Theo Mavratzakis, director of Tax Depreciation Australia, to uncover how investors can maximise their claims and save thousands.

What is Tax Depreciation and Why Does It Matter?

Tax depreciation is a valuable deduction that allows property investors to claim the decrease in value of their investment property over time. Many investors fail to claim their full entitlements, missing out on thousands of dollars in tax savings each year.

The Role of a Quantity Surveyor

• Quantity surveyors are specialists in building measurement and cost estimation.
• They provide tax depreciation schedules, which detail all depreciable assets in an investment property.
• Accountants do not prepare these reports – they rely on quantity surveyors to calculate depreciation claims.

What is a Tax Depreciation Report?

A tax depreciation report is a detailed document that outlines the depreciation of assets in an investment property. It allows investors to claim deductions over a 40-year period.

• Structural depreciation (Division 43) – Covers permanent building structures (e.g., walls, roofing, wiring).
• Plant and equipment depreciation (Division 40) – Includes removable assets (e.g., carpets, blinds, appliances).
• Investors can claim $10,000 - $15,000 in depreciation in the first year alone for a brand-new three-bedroom home.

What is Scrapping and How Can It Save You Money?

Scrapping is an often-overlooked method of maximising tax deductions when demolishing or renovating an investment property.

• Before demolition, a quantity surveyor assesses the remaining depreciable value of assets.
• Investors can claim 100% of the residual depreciation value in the year of removal.
• This is particularly beneficial for knockdown rebuild projects or major renovations.

Can You Claim Depreciation on an Older Property?

Many investors believe older properties aren’t eligible for depreciation. However, this is not always true.

• Properties built after 1987 qualify for structural depreciation.
• Renovated properties (even if renovated by previous owners) can still be claimed.
• Airbnb and commercial properties are also eligible for depreciation schedules.

How Far Back Can You Claim?

If you haven’t claimed depreciation on your investment property, you can backdate claims for up to two years. This can result in thousands of dollars in missed deductions being recouped.

The Cost vs. Benefit of a Depreciation Report

• Cost: Starts from $450 + GST for a residential property.
• Lifespan: A single report lasts 40 years.
• Return: If a depreciation report doesn’t generate at least double its cost in the first year, Tax Depreciation Australia offers a money-back guarantee.
• Even the depreciation report fee is tax deductible!

Key Takeaways

• 70% of investors don’t claim depreciation, missing out on thousands in tax savings.
• A quantity surveyor is required to prepare a tax depreciation report – not an accountant.
• New and old properties may be eligible for depreciation claims.
• Scrapping can allow full deductions for assets being removed before renovation.
• You can backdate claims for two years, reclaiming missed deductions.
• A tax depreciation report lasts 40 years and can provide massive long-term savings.

Frequently Asked Questions

Do I need a tax depreciation report if my property is brand new?

Yes! New properties have the highest depreciation benefits, often allowing investors to claim up to $15,000 in the first year.

Can I claim depreciation on a property I live in?

No. Depreciation deductions are only available for income-producing properties.

How soon can I get a depreciation report?

Most reports are prepared within 1-3 business days once all information is provided.

How do I get started?

Contact Tax Depreciation Australia at 1300-417-317 or visit https://tdaqs.com.au/ to request a report.

Listen to the Full Episode

For more in-depth insights and expert advice, listen to the full episode of the Home Building Hub podcast: Maximise Your Claims from Your Investment Property.

About the Home Building Hub Podcast

The Home Building Hub podcast, hosted by industry experts Colin Bischof and Darren Brennan, is Australia’s premier resource for new home buyers. With weekly episodes featuring special guests, the podcast provides objective, high-quality insights into the home building process—completely free and without sales pitches. From understanding financing options to navigating the complexities of building a new home, each episode is packed with actionable advice and tips.

Explore more episodes at www.homebuildinghub.com.au and join our growing community of informed home buyers.

Disclaimer

Whilst we’re all about providing value to you, this article should not be considered as legal or financial advice. It contains general information only and is based on the content discussed during the podcast episode. This information is relevant to the episode’s release date and may not be applicable at the time of reading. Always seek independent professional advice tailored to your personal situation before making any legal or financial decisions.