Property Investors Leave Thousands On The Table
Property investment expert and Custodian National Acquisitions Manger, Alex Fitzgerald said many investors became caught up in the "false economy" of not paying an expert to help them do their tax return and didn't realise they weren't claiming everything they could.
"Understanding how to calculate depreciation on your property and the difference in the rules regarding new and older homes, is essential to maximising your returns," she said.
Ms Fitzgerald urged property investors to familiarise themselves with the ATO's depreciation rules or seek professional advice from a qualified quantity surveyor before lodging their tax return this year.
"It's not too late, it doesn't matter whether you bought the property this year, or a couple of years ago," she said.
"A lot of investors are focused on capital growth at the moment but the expenses you can claim along the way, including depreciation, before that capital growth is realised can make a massive difference in the end.
"Regardless of whether a property is negatively geared or delivering a cashflow positive income stream, there are some really important deductions every property owner should know about."
Ms Fitzgerald said if the property was built after September 1987, investors could claim depreciation on the building's structure and items considered permanently fixed to the property such as solar panels and security systems.
"Investors in residential property, regardless of when the property was built, can also claim depreciation on internal fixtures such floor and window coverings, appliances and air-conditioners,"
"However, if the property was built before that date, investors cannot claim depreciation on the building's structure and fixed items.
"It's a critical difference and why I always advise residential property investors to opt for newer homes."
Ms Fitzgerald said while your accountant could offer general advice on some aspects of tax depreciation, if your investment property was built after 1987 and the costs of construction were unknown, quantity surveyors were the only professionals qualified to estimate those costs.
And for older properties that have undergone renovations after 1987, there is still an opportunity to claim depreciation for structures added by the previous owner.
"It can be a complex area and you do not want to be relying on guestimates when it comes to the tax office," Ms Fitzgerald said.
"When it comes to claiming depreciation on investment properties, it definitely pays to seek appropriate professional advice."
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