Claiming Depreciation will Assist an Investor’s Cash Flow.

Properties that generate income for the owner are eligible for significant taxation benefits.

Of all the tax deductions available to property investors, depreciation is most often missed because it is a non-cash deduction – the investor does not need to spend money to claim it.

“Research shows that 80% of property investors are failing to take advantage of property depreciation and are missing out on thousands of dollars in their pockets,” said Bradley Beer, Managing Director of BMT Tax Depreciation.

As a building gets older, items wear out – they depreciate. The Australian Taxation Office (ATO) allows property owners to claim this depreciation as a deduction.

Claiming depreciation on an investment property can make a big difference to an investor’s cash flow.

In order to claim these deductions, investors are encouraged to enlist a specialist quantity surveyor to complete a tax depreciation schedule. This schedule outlines the deductions available on specific property and is used by the investor’s accountant when preparing a tax return.

For one investor who had a tax bill from the previous year, the results were significant.

"I just wanted to let you know that our tax bill for last year of $2,600 became a tax cheque of $12,000 just because of the tax depreciation schedule! Thank you,” said Tiana, of Benowa Queensland.

Both new and old properties have the potential to attract significant depreciation benefits for the owner to claim as a tax credit. Property owners are also able to go back and claim missed deductions on previous financial year’s tax returns.

For an investor experiencing negative cash flow on their property, depreciation can be the key to turning their situation into a more positive scenario.

Another investor who owns a property purchased at $420,000 with a rental income of $490 per week with a total income of $25,480 per annum; had expenses for the property such as interest, rates and management fees totalling to $32,000.

By claiming depreciation, BMT Tax Depreciation was able to turn their negative cash flow position into a positive one, saving them $4,255 for the year.

The following scenario shows this investor’s cash flow with and without depreciation.

This investor used property depreciation to go from a negative cash flow position, paying out $79 per week, to positive cash flow, earning $3 per week on the property. BMT saved this investor $4,255 for the year.

Ensuring that each depreciation claim is maximised on any building requires a combination of construction costing skills and thorough knowledge of current tax depreciation legislation. For this reason, it is recommended for investment property owners to consult a specialist quantity surveyor to prepare a depreciation schedule before lodging their tax return.

BMT Tax Depreciation is accredited with the Australian Institute of Quantity Surveyors (AIQS), The Royal Institute of Chartered Surveyors (RICS) and The Auctioneers & Valuers Association of Australia (AVAA). BMT Tax Depreciation pride themselves on providing prompt and professional service to their clients, which has been mirrored in their customer feedback.

“Your customer service, from the first call to keeping us updated on progress was exceptional. The report is clear and thorough and was produced quickly. I would highly recommend your service to others," said Christopher and Rebecca of Chapel Hill, Queensland.

BMT Tax Depreciation can provide property owners a free over the phone assessment of available deductions. Contact BMT Tax Depreciation on
1300 728 726 today.

Article Provided by BMT Tax Depreciation.

Bradley Beer (B. Con. Mgt, AAIQS, MRICS) is the Managing Director of BMT Tax Depreciation.  Please contact 1300 728 726 or visit www.bmtqs.com.au for an Australia wide service.