Trusted quantity surveyors claim that one of the best strategies to increase your investment property’s bottom line is through depreciation. However, how much do you know about claiming depreciation on your property, and how effectively can you apply it to serve your benefit?
If you’re only aware of the basics, provided here are some proven effective tips on how you can benefit fully from claiming tax depreciation.
Say, you’re still in the process of purchasing a property, and the sellers claim that all the work they had put into it justifies their asking price. That seems fair, but you can negotiate better — get a significant reduction in the price if you probe into the past and current market conditions which can help you determine the original construction cost and how big its difference is from the present purchase price.
By securing this important data, you can pay less stamp duty and increase your chance of capital gain from your property investment.
Another valuable tip to know is that the higher the building structure, the higher the property depreciation as well; this is because taller buildings make use of bigger plant and equipment allowances. Plant and equipment allude to required services within the building such as lifts, and all the items within the property such as ovens, dishwashers, blinds, etc.
Therefore, if you’re constructing or making improvements and you want higher depreciation for the property, this can be the basis of your strategy for securing deductions; you can claim the cost of all the integrated features (plant and equipment) against your taxable income.
Third is, the little things count; furniture can increase depreciation deductions and attract higher deduction rates. A good example provided by quantity surveyors is how a $20,000 furniture set supplied by developers can actually result in an additional $10,000 deduction during the first year, and this will still balloon to a higher value as years roll in.
The last tip is hiring professionals to prepare property depreciation schedules for this will allow you to fully take advantage of the deductions (which have cut-off dates) that you are entitled to claim.
Quantity surveyors are the only people acknowledged by the law as suitable professionals for the job; they are meticulous with the process and they know the standards of ensuring a comprehensive and professional report that meets the ATO’s requirements, so you, the property owner, can secure the chance of getting a higher deduction.
In conclusion, maximizing the profitability of your investment property through tax depreciation is a strategy that every property owner should fully understand and utilize. By delving into the history and market conditions of a property, you can negotiate a better purchase price and potentially reduce stamp duty costs, thereby increasing your capital gains. Understanding that taller buildings with extensive plant and equipment offer higher depreciation rates can further enhance your tax deductions.
Additionally, incorporating quality furniture into your property can significantly boost your depreciation claims, providing substantial deductions in the initial years and beyond. However, to truly capitalize on these benefits, hiring professional quantity surveyors is essential. Their expertise ensures that property depreciation schedules are meticulously prepared, compliant with ATO standards, and fully optimized for maximum deductions.
These steps, from informed purchasing and strategic improvements to leveraging professional services, collectively enhance your ability to claim tax depreciation effectively. By doing so, you not only reduce your taxable income but also improve your property's bottom line, securing a more profitable and financially sound investment.
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