You can claim depcrciation of your investment property against your taxable income, similar to how you can claim the wear and tear on a car purchased for income producing purposes. There are two types of depreciation allowances available: depreciation of Plant and Equipment and Building Allowances
Plant and Equipment: refers to items within the building like ovens, carpet, light fittings, blinds, dishwashers etc
Building Allowances: refers to the construction costs of the building itself such as concrete and brickwork.
Both of these can be offset against your assessable income.
It will help you pay less tax. The amount the depreciation schedule says you can claim as allowances should effectibvely redue your taxable income by the same amount. For example. If your depreciation report specifies a claim of $10,000, then your taxable income should be reduced by that amount.
Yes, but the Australian Taxation Office (ATO) requires you to notify them of how much you spent on the renovations. You are also still entitled to claim depreciation even if the previous owners are the ones who completed the works. If you are unsure of the cost of the renovation you should seek the advice of a qualified quantity surveyor.
The simple answer is no. If your residential property was built after July 1985 you will be entitled to claim both Building Allowance and Plant and Equipment. If construction started prior to this date, you can only claim depreciation on Plant and Equipment (ie. carpets, blinds, ovens etc) but it is still worthwhile.
The cost will depend upon the property and the various factors (eg. property type, location etc) involved. However you will need a specific report for your property in order to be able to claim any allowances. The costs incurred in obtaining a depreciation schedule are 100% tax deductable.
A general rule of thumb is 2 - 3 weeks for a depreciation schedule to be completed. A lot of the time, it will depend upon how quickly we can gain access to your investment property
The amount saved varies per property as many factors must be considered when preparing a depreciation schedule. We suggest you speak with a qualified quantity surveyor to gain a clearer picture on the potential savings you could make.