3 Considerations When Claiming Property Tax Depreciation On An Older Property

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Many property investors consider depreciation when planning to purchase an investment property. If you own an investment property, you may be able to claim tax depreciation based on certain considerations. Here they are:

Can You Claim Capital Works Deduction On The Property? 

Capital works deductions are deductions you can claim for building and construction costs, building renovations, and improvements to surrounding properties. The age of your property will have an impact on whether you can claim a capital works deduction and how much it's worth. In general, you can only claim deductions on a residential property if it was built after 17th July 1985, and it can go up to 40 years from the completion of construction. You must provide details about the type of construction, date of construction commencement and completion, construction costs, and who carried out the construction. If you cannot work out the actual cost of construction, you will need to obtain an estimate from a qualified quantity surveyor to be able to claim the deduction.

Do You Have To Provide Information On Structural Renovations?

As the owner of an older investment property, you may have spend a bit on substantial renovations like structural improvements for the building, concrete driveways and retaining wall construction. If you didn't and the previous owner did renovate the property, you may still be eligible to claim some deductions. But you must provide this information to the Australian Taxation Office. If you are unable to estimate the cost of renovations for the property, you will need to engage the services of a quantity surveyor to determine this valuation. Keep in mind that if your renovations are eligible for deductions, these costs will be added to the capital works deduction based on your property's age.

What Assets Can You Claim Depreciation For?

You will likely be able to claim deductions for certain assets within your investment property. This will include assets where the value depreciates over time, including washing machines, dishwashers, fridges, air conditioners and similar items within the property. You can also claim deductions for expenses on the property, including council rates, lease document expenses, pest control, telephone calls, accountant fees, quantity surveyor fees, property agent fees, repairs and maintenance costs, and other expenses related to the property. You will need to provide evidence of these expenses to be eligible for claiming any tax deductions.

Follow these guidelines if you're planning property tax depreciation for your older investment property.