2 biggest misconceptions about depreciation
BMT Tax Depreciation’s Bradley Beer has handled thousands of depreciation cases over the course of his career as a quantity surveyor, but two seemingly simple topics almost always come up to this day—find out what they are below.
Do accountants look after depreciation?
The ideal scenario would be to have your accountant and a registered tax agent work hand-in-hand to ensure that you are maximising your depreciation claims every financial year, according to Mr Beer. Together, they determine construction costs and marry them with the tax rules applicable for depreciation purposes.
According to him: “We work alongside the accountant because we're specialists in depreciation.”
“Sometimes, accountants actually got it sorted out, but based on my experience, a lot of time, they haven't,” he highlighted.
Quantity surveyors are among the professionals duly recognised by the Australian Tax Office as qualified to prepare tax depreciation schedules for properties, so their services mean that you get accurate data.
Do old properties still get deductions?
Even after the changes in tax depreciation have been implemented, almost all properties still get deductions, Mr Beer said.
He explained: “These Budget changes mean some of those don't get as many again, but an old property still gets deductions.”
Quantity surveyors inspect properties before doing a depreciation schedule in order to identify all claimable deductions on your property, so he advised to engage one even before tax time.
At the end of the day, no property is too old to claim depreciation, according to Mr Beer.
In fact, BMT Tax Depreciation has seen owners of properties built before 1987 who are still able to claim more than $4,000 in annual depreciation deduction for the first five years.
Engaging professionals
Mr Beer strongly encouraged investors to get in touch with both their accountant and a registered tax agent to be able to make the best decisions about tax affairs and depreciation. Moreover, make use of the available information online and do your own research.
“Learn enough or ask the people enough questions so you can get the most out of investing in property, which is what you're trying to do in the first place,” he concluded.
Tune in to Bradley Beer’s episode on The Smart Property Investment Show to know more about what depreciation is and the impact that calculating it properly will have on your tax situation.
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