First home buyer schemes, immediate asset write-offs for business owners, Job Keeper; it could appear that the Government stimulus incentives of 2020 were directed at any beneficiary other than property investors.

 

However, property investors need to remember their ability to boost their fiscal bottom line through existing tax deductions. The latest statistics released by the Australian Taxation Office (ATO) have revealed what investors are claiming from the deductions available.

According to the ATO, the average interest repayment tax claim made by property investors in FY 2018/19 was $9,640, and the average body corporate fee claim was $2,448. The combined land tax, property management fees and insurance average claim came to $3,880.

Depreciation, unlike those already mentioned, doesn’t require an expense to claim. It is the natural process of wear and tear, therefore reducing tax liabilities for investors by thousands without any outlay.

The ATO numbers show that on average, depreciation is the second biggest tax deduction, after investment loan interest repayments.

According to the ATO data released in June 2021, the average investor depreciation claim in FY 2018/19 was $3,885. This reported average was made up of $2,571 in capital works allowance and $1,314 in plant and equipment depreciation deductions.

Taking a deeper look into the deductions achieved by BMT Tax Depreciation Schedules during this same period provides further insights. The average depreciation claim found by BMT in FY 2018/19 was $8,260 – $4,300 more than the ATO average.

These numbers alone prove the importance of not discounting capital works deductions which can be claimed at a yearly rate of 2.5 per cent. This average also includes properties impacted by the 2017 legislation changes, demonstrating that plenty of plant and equipment deductions are still there to be claimed for eligible assets.

In more good news, BMT data trends suggest that averages will continue to progressively rise. BMT’s FY 2019/20 average depreciation claim came to just over $8,670, while the average claim for FY 2020/21 came to $8,940.
The results prove the importance of having a tax depreciation schedule prepared by a specialist.

BMT’s team conduct physical site inspections and apply all relevant legislation to ensure depreciation claims are maximised and full compliance is maintained. The site inspection is required to substantiate any depreciation claim in the event of an ATO audit and is supported by the Australian Institute of Quantity Surveyors and the National Tax and Accountants’ Association.

Extensive experience, a comprehensive approach and ensuring quality means BMT produces the most thorough tax depreciation schedule on the market. A BMT Tax Depreciation Schedule lasts for the lifetime of the property (up to forty years) and can be easily updated if any improvements and renovations are made to a property.

If you would like more information, contact Bradley Beer from BMT on 1300 268 628.

 

 

Information in this article was supplied by BMT Tax Depreciation Quantity Surveyors