October 31st is a date that has different meanings for different people. For a number of younger members of the community, (and those with a sweet tooth), it is the date when visiting the neighbourhood in Halloween costumes has become increasingly common here in Victoria. However, for those Australians who take care of their own tax affairs, it is also the deadline for lodging their annual tax returns.
The approach of the end of October is particularly important for those property investors who lodge their own returns, (you have more time if you lodge through a tax agent), as some careful planning now could save you quite a substantial amount of money in years to come. For example, one area of your tax return that a surprising number of property investors tend to overlook is depreciation.
What is depreciation?
If you’re a property investor, depreciation is a deduction that you can claim on your rental property for the normal wear and tear on the building and its assets over time.
There are two types of depreciation. One involves the structural elements of the building, and this makes up the majority total depreciation claims. The second category applies to the building’s fixtures and fittings, and includes a range of assets like carpets, window furnishings and other appliances.
Do I need a depreciation schedule?
A tax depreciation schedule is used to calculate these deductions for your tax return each financial year. If you don’t have one, you can’t claim for depreciation.
A professionally prepared depreciation schedule will allow you to not only claim for the most recent tax year, even if you only owned the property for part of the year, but it will also allow you to claim back tax for past years if you failed to claim for depreciation in the past.
Have I left it too late?
There is still time to ask a qualified quantity surveyor to prepare a depreciation schedule for your investment property in time to lodge your tax return by October 31st. However, this will normally require an inspection of the property by the quantity surveyor, so you will need to get busy soon.
Making the most of your property investment
Don’t forget, if you are making any kind of plans for your property investment portfolio at the moment, from adding another investment to considering selling, it is important to get experienced guidance from someone who knows the property market intimately.
So if you are looking for the right advice in an increasingly complicated property market, be sure to call the team at Ian Reid Buyer Advocates on 9430 0000, or go straight to the Ian Reid Buyer Advocates website.