It is that time of the year again… Tax Season!
For most people it is quite a simple process, but when you have an investment property (or portfolio) things get a little more complicated. Records and payments must be clear, concise and accurate.
One of the benefits of having your property managed through a professional real estate agent is that we take care of most of the hardships by providing a monthly statement throughout the year with copies of all your paid accounts as well as an end of financial year statement.
Whilst this saves you time and assists you to get your tax refund, have you ever thought about using, in conjunction with the EOFY statement, a Tax Depreciation Schedule?
The benefits of a tax depreciation schedule are extensive. Depreciation deductions can significantly reduce your taxable income and help your property return a positive cash flow sooner.
What is a Tax Depreciation Schedule you ask? A Tax Depreciation Schedule is simply a document that tells your accountant how much depreciation to claim on your investment property. Depreciation on your investment property is just compensation for wear and tear, which occurs naturally over time.
The Depreciation Schedule contains two categories:
Capital works are part of the property itself and any renovations done to the structure of the property as well as any works done to the kitchen, carpets or exterior patio areas get included in this section.
Plant and Equipment comprises of movable items from the home (or commercial) premises. Things like white-goods, furniture and electrical etc.
The depreciation schedule is carried out by a quantity surveyor. They calculate the value of the items in the home and how they will decline over time. This report will last you over 20 years, and once handed to your accountant, they take care of the rest by using the schedule as a guide every year at tax time to assist them in making an accurate return, ensuring the least amount of tax paid and best refund for you as possible. The cost of the report is even tax deductible too!
If you would like to know more about having a Depreciation Schedule carried out on your investment property please click on the below links for more information.