Investors must do this key step before the October 31 deadline
Depreciation on your rental property is a lucrative deduction you can claim each financial year, say BMT Tax Depreciation.
The October 31 deadline is fast approaching, and many investors are scrambling to get their paperwork together in time.
If you’re a property investor, one of the most important things to have ready is your tax depreciation schedule. This important step can save you thousands of dollars at tax time.
Why is the October 31 deadline important?
If you’re doing your individual tax return for the 2019-20 financial year, it must be lodged by October 31.
It’s important to be organised for this deadline because failing to lodge in time means you will come under scrutiny and can expect to pay a fine to the Australian Taxation Office.
What is depreciation?
Depreciation is the natural wear and tear of a building and its assets over time. If you’re a property investor, depreciation on your rental property is a lucrative deduction you can claim each financial year.
You can claim depreciation under two categories. The first category is capital works which refers to the structural component of the building. Capital works deductions make up between 85 to 90 per cent of total depreciation claims.
The second category is plant and equipment, which refers to the property’s easily removeable fixtures and fittings. Some common assets that fall under this category include carpet, blinds and smoke alarms.
Why you need a tax depreciation schedule before October 31
A tax depreciation schedule is used to determine depreciation deductions each financial year. If you don’t have one, you can’t claim depreciation.
Your schedule starts from your property’s settlement date, not the schedule completion date. This means that it’s never too late to claim depreciation. A schedule can also let you adjust previous tax returns so that you can claim back missed dollars.
Even if you only owned the property for a few months during the relevant financial year, depreciation can still be claimed through partial year deductions. BMT Tax Depreciation has seen partial year deductions boost cash flow by thousands through the immediate deduction and low-value pool.
A site inspection is key to claiming maximum deductions
While it can be tempting to rush the tax depreciation schedule preparation process, it’s important to keep in mind that the schedule lasts a lifetime. This means it’s crucial to get it right from the very start.
A site inspection plays an important role in claiming depreciation and preparing a schedule. When a site inspection isn’t completed, deductions are missed, and costly errors are often made. Both the Australian Institute of Quantity Surveyors and the National Tax and Accountants’ Association support the need for site inspections when completing a schedule.
Not only does a site inspection ensure your depreciation claim is compliant, it also the best way to maximise your claims.
This is because all hard-to-find deductions are always found by the specialist site inspector.
Contact the specialist before October
BMT Tax Depreciation has been preparing tax depreciation schedules for over twenty years. BMT’s dedicated site inspection team completes inspections across the country and for all property types including houses, apartments, duplexes, townhouses and commercial buildings.
To learn more about depreciation and beat the October 31 deadline, contact BMT on 1300 728 726 or Request a Quote.