Claiming rental Property Depreciation for investment properties is simple when you have a Tax Depreciation Schedule. Investment Property Depreciation is often the largest claimable tax deduction for rental properties. Savvy property investors know that claiming property depreciation on their investment properties maximises their cash return.
What is Property Depreciation?
Property Depreciation is just compensation for wear and tear on rental investment properties. It’s nothing more complicated than that. Businesses claim depreciation on their ‘business assets’: computers, furniture, vehicles etc. To a property investor, a rental property is like a business asset, so they can depreciate it. The building itself depreciates, as do the appliances, floor coverings, hot water unit etc.
Investment Property Depreciation is Calculated & Shown in Your Depreciation Schedule
We were asked that recently what a Tax Depreciation Schedule is. An accountant had told their client they needed a Tax Depreciation Schedule and to call us. So the client asked us what a Tax Depreciation Schedule was (accountants charge by the hour and a long conversation with us is free.)
Property depreciation is treated by your accountant as just another tax deduction. Every year you probably claim interest payments, council rates, water rates, maybe property manager fees as tax deductions. Property Depreciation is a deduction many first time property investors fail to claim – often because they don’t know about it. But you know about it now, don’t you. The difference between depreciation and those other deductions is that the only way to know how much depreciation you are entitled to is to get someone like us to create a property Depreciation Schedule for you.
Property Depreciation and Quantity Surveyors
Some people want to know why their accountant can’t take care of it. That’s because in most cases, putting together a property Depreciation Schedule for depreciation requires somebody being able to estimate the construction cost of the building when it was built. Accountants can’t do that. The people most qualified to estimate building costs are Quantity Surveyors. We are the only national company that still uses Quantity Surveyors on the ground to inspect properties. Call us old fashioned, but we think using Quantity Surveyors to inspect properties and then estimate the construction costs and value the Assets is more accurate than sending someone to the property who just gathers some information for someone else to cost..
So now you know what a Depreciation Schedule is, why you need one, and who is best qualified to prepare one for you.