Do you know you can claim depreciation on OLDER properties?
Often when we chat with our clients it becomes apparent that they do not realize they can claim depreciation on pre-owned properties.
The following is some useful information provided by BMT in relation to depreciation and older properties – Enjoy!
61% of depreciation schedules prepared by BMT Tax Depreciation are for pre-owned properties. Of these schedules, 33% are properties which were built prior to 1987 and see owners claim an average of $4,042 in annual depreciation deductions in the first five years.
Property depreciation is made up of two main elements: capital works deductions and depreciation of plant and equipment. Capital works deductions are deductions available on the structure, including items that cannot easily be removed. Depreciation of plant and equipment is available on mechanical and removable fixtures, including those deemed to have an effective life set by the Australian Taxation Office.
The capital works component of a property is strictly qualified by age. Legislation states that for any residential property which commenced construction prior to 15th of September 1987, the owner will not be able to claim capital works deductions. For commercial buildings this date is the 20th of July 1982. Depreciation of plant and equipment is not limited by age; it is the condition and quality of each item which contributes to the depreciable amount.
Another important part of maximising claims on older properties is identifying any additional works, extensions or internal refurbishments which have taken place over the life of the property. Even if the work were completed by a previous owner, any structural addition completed after the qualifying dates can be claimed as capital works, further increasing deductions.
Substantial depreciation deductions may be claimed by engaging a BMT Tax Depreciation specialist to assess an investment property, no matter the age.