BMT answers your depreciation questions

The complexity of depreciation unsurprisingly has many scratching their heads. While investors don’t need to be depreciation experts, BMT Tax Depreciation has answered some of the most common questions on this area of taxation for you.

Q. What is depreciation and how does it work?
It’s the natural wear and tear of a property and assets over time. While all properties and assets depreciate, depreciation can only be claimed as a tax deduction if the property is income-producing. This means only property investors, commercial owners and businesses can claim depreciation.

Depreciation is a tax deduction, so it reduces the owner’s taxable income meaning they pay less tax. Depreciation deductions have the potential to boost cash by thousands of dollars.

Q. What is a tax depreciation schedule?
This is the key to claiming depreciation. A tax depreciation schedule is a report that identifies all available depreciation deductions for the property. The schedule lasts a lifetime, and the preparation cost is 100 per cent tax deductible.

Q. Can investors claim depreciation on all types of property?
Most properties, both new and old, have depreciation available. There are some myths out there that older properties can’t benefit from depreciation, but this isn’t always the case. While second-hand properties are impacted by 2017 legislation changes, the owner can still claim depreciation on new assets and any eligible capital works.

Q. Why does an investor need to consult with a specialist quantity surveyor? Doesn’t an accountant look after things like this?
A specialist quantity surveyor, such as BMT, prepares the tax depreciation schedule that an accountant uses to determine depreciation deductions.

Consulting with both a specialist quantity surveyor and an accountant will help make an investment strategy bulletproof.

Q. What’s the difference between a repair and an improvement?
An improvement enhances something beyond its original state, such as replacing a wooden fence with new Colorbond steel fencing. A repair’s purpose is to fix something, for example patching a hole in a wall or repairing pipes.

There’s also a big difference between the two when it comes to claiming them. Improvements must be depreciated using either capital works deductions or as plant and equipment. Meanwhile, repairs or maintenance can be claimed as a full expense in the year it was paid.

Q. What areas does BMT Tax Depreciation cover?
BMT offers an Australian-wide service, so no matter if the property is in Sydney or Alice Springs, the team can prepare a tax depreciation schedule. Their specialist site inspection team inspects all types of properties in the schedule preparation process to ensure all deductions are identified.

The team is dedicated to helping as many investors as possible. To learn more, contact the team on 1300 728 726.
BMT Tax Depreciation is Australia’s leading supplier of residential and commercial tax depreciation schedules.

Bradley Beer (B. Con. Mgt, AAIQS, MRICS, AVAA) is the Chief Executive Officer of BMT Tax Depreciation. Please contact 1300 728 726 or visit bmtqs.com.au for Australia-wide service.

 

Share:

More Posts

December market update

Vendors made up for lost time as we closed in on 2022, bouncing back strongly after months of uncertainty due to lockdowns and limits. Sellers listed in record numbers in the final months of 2021. Figures from Domain show newly advertised properties in Melbourne’s inner and outer eastern suburbs jumped by 54 and 50 per cent respectively in the year’s

November market update

Melbourne’s east is proving as coveted as ever, with Wantirna, Blackburn and Ringwood ranking among Melbourne’s 10 most liveable suburbs. The PwC Australia City-Pulse 2021 report rated Wantirna as Melbourne’s fourth best postcode, based on criteria such as access to transport and amenities, housing prices, job accessibility and open space. Wantirna South, Glen Iris and Camberwell also made the top

Seven tips for buying your first home

The hardest part of climbing the property ladder is often getting on that first rung. It’s equal parts exciting and overwhelming as you take that first step, and any uncertainty can be intensified by Melbourne’s fiery property market. While housing prices have jumped 15 percent in our city this year, there is still ample opportunity for first home buyers, with

The purpose of property appraisals – beyond selling

The emotional security of owning a home is priceless – but sometimes, you need to put a solid number on its value. Those moments are when you need a property appraisal, as an independent assessment of a property’s worth. Professional appraisals are an important part of buying or selling a house, as they can help determine how much you can

Send Us A Message