You can get a depreciation schedule from a specialist accounting firm that utilises trained quantity surveyors to offer depreciation report services. By selecting a business that works directly with the ATO, you can guarantee that all items are appropriately recorded in the schedule, making your tax return straightforward and concise. The benefit of a tax depreciation schedule is that the expenses of completing it are tax-deductible, making it even more apparent why you should utilise a residential quantity surveyor.
Tax deduction on your real estate investment
Calculating the optimal tax deduction is critical for property investors who want to maximise their after-tax earnings. Depreciating assets are recognised by the Australian Taxation Office (ATO) as prospective tax deductions to reduce the tax due on your assessable income.
From the time of settlement/completion of building or refurbishment of the property, a tax depreciation schedule should be prepared and handed to your accountant to include in your yearly tax return.
How do I use a tax depreciation schedule?
Simply send your Tax Depreciation Schedule to your accountant so that they may incorporate the computed values in your tax return. If you’re doing your own tax return, you may use the numbers given to input the necessary amounts into the ATO tool’s rental property area.
Considerations when purchasing a schedule
Here are some of the factors you should consider when purchasing a depreciation schedule.
Make sure your Quantity Surveyor is a registered Tax Agent with the Australian Tax Practitioners Board.
Use a professional quantity surveyor: Calculating and reporting Capital Allowances and Tax Depreciation is not a primary business. An expert will be up to speed on the most recent laws and will have the best knowledge in understanding legislation and tax judgements to maximise your claims.
Your selected service provider should also be able to:
- Take a free desktop assessment to get a customised estimate of deductions
- Conduct all required property searches
- If necessary, arrange for a property inspection; and
- Review the report with you or your accountant in the future
What is the purpose of a tax depreciation schedule?
When preparing your tax return, a tax depreciation schedule will detail the deductions you may claim. To guarantee ATO compliance in the event of an audit, these deductions must be appropriately evaluated and approximated.
Although some accountants claim to compute these deductions for you, the ATO does not consider accountants to be competent to estimate construction costs and asset values.
Accountants are only competent to deal with fixed costs (receipts and bills), not to predict overall expenses. For regulatory concerns, it is essential that a recognised specialist complete your depreciation schedule.
Is it possible to transfer tax depreciation schedules from one owner to another?
A tax depreciation schedule developed for a prior owner of your property cannot be transferred to you as part of the transaction. Individual tax depreciation schedules are customised reports for property investors. Older reports sometimes fail to account for renovations made to the property after the issue date and hence may not fully show the property’s total depreciation.
For more details about tax depreciation schedules, don’t hesitate to contact us on 1300 313 524.