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Empower Wealth Blog post by Empower Wealth

What is a Tax Depreciation Schedule?

Depreciation is tax deduction for property investors. We invest in property to increase our wealth over time. One thing that we need to do is make sure we claim everything that we are able to claim, one of those thing being depreciation. Items in a property are wearing out over time, the buildings will one day fall over I guess and so the tax office allows us to claim part the cost of these things and the value of these things in properties as a tax deduction each year.


Why doesn’t my Accountant look after my Tax Depreciation?

That’s one of the first questions. We work alongside the accountant is the answer to that. The accountant does all of your tax return and we pull together basically one number for the tax return which is the depreciation number. Now there’s two reasons why we work alongside with them. We are a s specialist in getting as much deductions as we can because we know all the rules and secondly, it’s something around compliance where traditionally, quantity surveyors estimate the construction cost of the buildings. So when the tax office says we want someone who knows about the construction cost the building’s involved in this process, so they will only accept the estimates done by a quantity surveyors or a relevant professional such as a quantity surveyor for the purpose of the depreciation on the building.


Does the date of the asset affect the Depreciation Schedule?

There is sort of two areas of depreciation and the first relates to what we call plant and equipment or the tax office calls it plant and equipment or fixtures and fittings. There’s no special dates on those things but they are like carpets, hot water services, blinds, stoves and something within that range. But the other part is a deduction that relates to the structure of the building and you get to claim 2.5% of the construction cost each year. And in order to do that a residential property now basically needs to be build after 1987. So if it’s built before then you don’t actually get something back on that original structure.

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