An investment property depreciation schedule is basically a summary of the tax deductions you can claim for the depreciation of your investment property. This can include structural elements like bricks and concrete and also “plant and equipment” components such as ceiling fans, blinds and the dishwasher. Each depreciable item is evaluated to figure out how long it will last and how much depreciation can be claimed against it for each year of its life.
Why do you need a depreciation schedule?
So you pay less tax. Claiming depreciation on your investment property will lower your annual taxable income, and therefore your tax bill. A depreciation schedule maps out the deductions you can claim for up to 40 years and can put a significant amount of money back in your pocket.
How do you get an investment property depreciation schedule?
Call a Quantity Surveyor. To maximise your tax depreciation entitlements, and to comply with ATO rules, your investment property depreciation schedule must be prepared by a qualified, registered Quantity Surveyor.
They will physically inspect your property to evaluate and record all depreciable items and they will conduct any searches required (via local council, property agents or strata managers) to build a full picture of your property’s history. Using this information, they’ll prepare and present a detailed summary of the depreciation amount you can claim on your tax return each year.
Insider tips for using your investment property depreciation schedule
- Have your Quantity Surveyor send the schedule directly to your accountant. Looking after your investments should be a team effort.
- Don’t forget to claim the cost of preparing the actual schedule.
- Ideally, have a depreciation schedule completed straight after settlement and before a tenant moves in. This lets your Quantity Surveyor see the property in its “original condition” and it saves you having to coordinate inspection times with a tenant.
- Don’t discount older properties. You can claim depreciation of both structural and plant elements of properties built after 1987, and for properties built before 1985 you can claim depreciation of plant and equipment. You may even be able to claim depreciation on a previous owner’s renovations.
- Just get it done. An investment property depreciation schedule really is a one-off expense that pays for itself and can save you thousands of dollars throughout the life of your investment.