It’s tax time – Expert Rob Leembruggen from WeClaim talks us through Tax depreciation Schedules
By | 14th Jul 17

It’s tax time – Expert Rob Leembruggen from WeClaim talks us through Tax depreciation Schedules

What is tax depreciation?

It is a legitimate tax deduction on an income producing property. There are two parts of tax depreciation that you can claim, one being capital works and assets. If you have an income producing property, this could be the largest tax deduction you will be able to claim for your investment.

Capital works: The ATO defines capital works as:

  • buildings or extensions, alterations or improvements to a building
  • structural improvements such as sealed driveways, fences and retaining walls
  • earthworks for environmental protection, such as embankments

These works must have been completed after 1987 and have a residual value.

Assets: ‘Depreciating assets’ are assets of a limited life that wear out: eg. carpet, curtains, dishwashers etc

Changes to The Budget: The Government will confine depreciation deductions for plant and equipment — these are items that can be easily removed such as carpets and dishwashers — only to those expenses directly incurred by investors.

I’ve heard about scrapping, what is it?

Scrapping is the removal of depreciating assets that you have purchased from an investment property. As long as they are in working order these assets can be depreciated. You will need to photograph and record it. Rod from Weclaim.com.au recommends that you get a scrapping report which will allow you to claim depreciation from capital works and assets on your property. You can do this by using an existing depreciation schedule or a tax depreciation specialist.

“My accountant does it for me!” Accountants are not qualified to estimate construction or scrapping costs. It’s a common misconception and we recommend speaking to a depreciation expert if you are unsure or wanting to learn more about how you can get the most out of your investment.

With the upcoming changes to tax depreciation laws, Rod suggests you wait until the 19th of July until we know more from the proposed changes before starting a depreciation schedule. For more information and expert advice, you can contact Rod by emailing rod@weclaim.com.au