FAQ – Tax Depreciation Schedules
What is tax depreciation?
Depreciation is the decrease in value of an item over time. The Taxation Office allows property investors to claim a deduction of the original costs related to a building, including plant and equipment (e.g. fittings and furniture) and capital works (such as renovations), over the effective life of the item.
What is a tax depreciation schedule?
A tax depreciation schedule is a document that helps property investors to determine the tax deductions available to them. The ATO classifies the wear and tear on a building over time as an expense to investors which they are entitled to claim.
A qualified Quantity Surveyor can determine the wear and tear of those items and provide the tax depreciation schedule of the property.
The term ‘tax depreciation schedule’ is also known as:
- a Depreciation Schedule
- a Quantity Surveyor’s Report
- or a Capital Allowances Schedule
Why should you choose SPI Property Inspections to prepare your tax depreciation schedule?
Our contract inspectors have the essential skills and knowledge to carry out the data collection for your schedule. We are happy to guide you through the process and answer any questions you may have relating to your completed tax depreciation schedule.
Why should you invest in a tax depreciation schedule?
A depreciation schedule will help reduce your tax and is one of the tax deductions you should be aware of when investing in property. If the property is newly built, the greater the depreciation will be, particularly in the first ten years from settlement date. However, it is still worthwhile investing in a depreciation schedule for an older property as well.
Who can prepare a depreciation schedule?
A registered Quantity Surveyor is qualified to estimate the historical construction cost of a building and process the claim to the ATO standard. An Accountant is not suitably qualified to estimate construction or renovation costs. Subsequently, it’s in your best interests to have your tax depreciation schedule completed by a registered Quantity Surveyor.
How long does a tax depreciation schedule last for?
Generally, a tax depreciation schedule will contain a full 40 year analysis of your tax entitlements. It’s important to remember that if you renovate the property, your schedule will need to be updated to reflect the changes to the property.
How much depreciation will I receive?
This is probably the question we get asked more than any other, and we completely understand how important this question is. Fortunately, most people in turn understand that it is very hard to estimate anything without seeing the property. As a rule, newer properties tend to have more depreciation. The amount of depreciation can be anywhere from $1,000 to $15,000 in the first year, depending on the property.
Is the cost of my tax depreciation schedule tax deductible?
Absolutely, the cost of your tax depreciation schedule is 100% tax deductible.
What if I do renovations?
Yes, all renovations are deductible and depreciable. So, if you own a property of any age and you renovate it, the cost can be claimed through depreciation. You will also have the costs of the renovation which are deductible.
How do renovations affect an existing tax depreciation schedule?
If you have renovated only a couple of items, you can pass those costs on to your Accountant to include in your tax return for the year. If you have carried out a full renovation of all or part of the property, you will need to complete a second depreciation schedule for that component of the works.
We recommend you contact your Accountant for renovation expenses that have cost less than $30,000. In these situations, your Accountant can usually assist you with this process.
For renovations that have cost more than $30,000, please contact our team and we can assist you with a second tax depreciation schedule to reflect the changes to your property.
When should you get a tax depreciation schedule completed?
The ideal time to prepare a tax depreciation schedule is close to your settlement date.
Can you backdate a tax depreciation schedule?
Yes, a tax depreciation schedule can be backdated by two years.
What is the process for booking a tax depreciation schedule?
The SPI system is designed to make a tax depreciation schedule a simple and time-effective exercise. We have a 4-step process to ensure you get your schedule quickly.
How long does it take to prepare a depreciation schedule?
Once we have all the correct information and payment from you, we will contact the Property Manager to arrange a time that suits all parties. Once the inspection has taken place and the data is collected, the report will take approximately 3 business days to complete.
What if you rent out your own home?
If you rent out your own home, you can begin claiming depreciation from the date you made the property available for rent. The amount of depreciation claimed will differ from property to property and will depend on how long you have owned it. Please contact the SPI team and we will assess whether you can claim depreciation on your property.
You have a holiday rental property. Can you still get a tax depreciation schedule?
As the owner of a holiday rental, you are entitled to claim depreciation on the property and furniture that is located within the property. However, you can only claim for the periods where the property is rented or available for rent. You may be surprised to know that you can also claim depreciation on linen, kitchen crockery, videos, electrical equipment, games and books.
Do we also prepare tax depreciation schedules for commercial rental properties?
Yes, SPI can also prepare a depreciation schedule for a commercial rental property. The cost of a commercial depreciation schedule will depend on the size of the property. Contact us for a quick free quote for a commercial property on 1300 721 032.