Maximising Tax Returns 101 | Investors Guide

Navigating the road of property investing comes with endless twists, turns, and market changes.

Especially with the impacts of rising interest rates, how can you ensure you are making the most out of your investment property and your home improvements?

Astonishingly, 80% of property investors don’t take full advantage of tax depreciation. This can be due to being ill-informed and not having a qualified, property expert assessing your property. Too often, key details are missed such as the true quality of tiles, timber, and fixtures; and as a result, properties are not accurately valued and potential savings are lost.

This lost opportunity could be $15,000 of savings each financial year, per investment property. I don’t know about you, but I for one would happily take an extra $15,000 per year!

A tax depreciation assessment and schedule provided by an Acumentis property expert allows owners of income-producing properties to claim depreciation allowances. This enables owners to account for the aging and depreciation of a building and its assets. All deductions are based on property type, age, and historical construction costs.

Deductions fall under 2 categories that your Acumentis specialist will evaluate:

Tax depreciation schedules are used by accountants, and when providing this report to your accountant the owner is eligible to claim all the depreciation allowances they’re entitled to. It’s an ongoing tax deduction over a period of time and will reduce the payable tax and increase money in the property owner’s pocket.

80% of property investors don’t take full advantage of tax depreciation

The key benefit of utilizing an Acumentis property valuer is our level of expertise. We ensure our tax depreciation schedules are completed only by qualified and experienced valuers, experts in property, and with a trained eye to capture all of the details that will deliver the maximum possible returns for our clients.

MYTHS

The second most alarming reality is the misconceptions around tax depreciation that again is costing investors thousands.

My property is too old to depreciate.

Any investment property built after 1987 can attract deductions.

Tax Depreciation isn’t worth it with Capital Gains.

Claiming tax depreciation increases your capital gain but enables a larger after-tax profit. The increase in tax you pay at the capital gains event is less than half of the savings you would have made through claiming tax depreciation over the life of your investment.

These renovations were already in place so won’t impact my tax depreciation.

When you purchase an investment property you have also purchased the entitlement to claim depreciation on the property’s improvements - it does not matter if the renovations were undertaken by the previous owner.

It's too late to start claiming depreciation now

If you've ownerd a property for a while but haven't had a depreciation schedule in place the good news is you can claim for back dated depreciation.

It's not worth getting a depreciation schedule for my small apartment

Depreciation schedules are worthwhile on all property types. In addition to the building itself and fixtures and fittings in the apartment, apartment complexes have many depreciable items including common areas like pools, gyms, and entertaining spaces. Read how a depreciation schedule on this one-bedroom unit resulted in cash flow savings between $6,000- $14,000.


 

The government has in place various incentives running until 2023 that may mean depreciation deductions can be increased. The intricate details of these deductions may not be known by your accountant, however it is easy to become depreciation-savvy with the right team by your side.

Call Acumentis to find out more today.

Nathan King
National Director – Advisory, State Government & Projects, State Director – WA
CPV | AAPI | FRICS
  |  LinkedIn
Want to hear more
from Acumentis?

Sign up to our mailing list