How to maximise depreciation for investment property

What 80% of investors don't know about property depreciation: How to maximise deductions or your money back.

depreciation Your accountant is great with numbers when it comes to tax, you’ve got a buyer’s agent picking the next hotspot for you, even your own mortgage broker to help you find the best loan - but who’s got your back when it comes to maximising your deductions?

The advantages of having a depreciation report completed are often overlooked, even by the most experienced investors. So, why do you need one and how could it benefit you?

Depreciation comes in two elements; the actual structure of the building, and what’s inside of it. What’s inside depreciates the quickest, so you’ll need to take advantage of it as soon as you can. This is where tax depreciation comes in, to help you with your cash flow needs at times when it’s needed most.

Bradley Beer, Managing Director of BMT Tax Depreciation Quantity Surveyors has over 15 years experience in his field. From the building and construction industry to property depreciation, he shares some inside tips and knowledge and explains the importance of tax depreciation below.

Bradley Beer Tax Depreciation

Bradley Beer

  • Bradley is the Chief Executive Officer of BMT Tax Depreciation.
  • Bradley is a regular speaker and presenter covering property depreciation services on television, radio, at conferences and exhibitions Australia-wide.
  • He has more than 15 years of experience in the depreciation, building and construction industry.

What is property tax depreciation and what benefit does it have for the investor or homeowner?

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. Depreciation can be claimed by any property owner who obtains income from their property.

Depreciation is not available to be claimed on a primary place of residence simply because it is not income producing. 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.

What is a quantity surveyor and why do I need to use one?

Traditionally a quantity surveyor’s role is to measure buildings and estimate construction costs based on plans and specifications in order to determine how much it would cost to build the property in the current market at the specified location.

Quantity surveyors are one of the few professionals recognised by the ATO to have the appropriate construction costing skills to calculate the cost of items for the purposes of depreciation.

A quantity surveyor’s skills and knowledge of the legislation allows them to find the maximum depreciation deductions available for an investor.

With every enquiry that we get, we always ask a couple of questions about your property to ensure that getting a depreciation schedule completed is going to be worthwhile. If we don’t find at least twice our fee in deductions within the first full year we will not charge for our services.

What are your favourite tips for property tax depreciation?

One of the most common questions that we hear is ‘doesn’t my accountant take care of this’? We work alongside your accountant by providing them with a detailed depreciation schedule outlining all of the deductions available on your investment property. Your accountant then uses this depreciation schedule when preparing your tax return.

Many people believe that older properties will have no depreciation left. While an older property will not have as much depreciation available as a new property, there are often still valuable deductions available to be claimed. Many times there will have been updates and renovations completed on the property by a previous owner which can be claimed as a deduction by the current owner. It is always worth contacting a quantity surveyor for a free assessment to determine if depreciation is available on your property.

We’ve found that about 80% of investors are not maximising their depreciation deductions. If you haven’t been claiming or maximising your depreciation deductions, the ATO allows you to go back and amend two previous tax returns to reclaim the dollars you have been missing out on.

When planning a renovation, don’t forget to take into account the depreciation deductions which may be available to claim on the existing assets being replaced within the property. When items are removed from a property or ‘scrapped’, the ATO will allow you to claim the remaining depreciable value left as a deduction. It is important to have a quantity surveyor complete an inspection of the property prior to the renovations starting in order to document all items prior to their removal. Once the renovations have been completed, the quantity surveyor is then able to complete a second inspection to determine the depreciation deductions that are available for all new items within the property as well as determining which assets were removed and had depreciable value left to be claimed.

One of the most important tips I can offer is to get in a qualified quantity surveyor for your depreciation schedule. Although there are many low cost DIY options on the market, these often end up costing you more in missed deductions than you would have saved in the original cost of the schedule. It’s also important to remember that the fee for the completion of a depreciation schedule is 100% tax deductible so it won’t end up costing you a cent in the long run anyway.

How much does a depreciation schedule cost?

For standard residential properties or units, the fee to have a tax depreciation schedule completed is generally $770 including GST. This includes the property inspection completed by one of our qualified staff and the 40 year depreciation schedule which will last the life of the property.

With every enquiry that we get, we always ask a couple of questions about your property to ensure that getting a depreciation schedule completed is going to be worthwhile. If we don’t find at least twice our fee in deductions within the first full year we will not charge for our services.

It is always worthwhile enquiring about the depreciation deductions which may be available on your investment property. This could lead to thousands of dollars back in your pocket.

Check out investment loans from across the market

Rates last updated August 21st, 2018
$
Loan purpose
Offset account
Loan type
Your filter criteria do not match any product
Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
3.89%
4.24%
$0
$0 p.a.
80%
Sharp interest only package rate
Fix your rate and minimise repayments for 2 years with this interest-only investor mortgage.
3.99%
3.99%
$0
$0 p.a.
80%
Special discounted interest rate
Get a discounted, low-fee investor loan from a convenient online lender. 20% deposit required.
3.98%
3.98%
$0
$0 p.a.
70%
Requires a 30% deposit
Investors can get a 100% offset account and a low rate if they have a big deposit. 100% online application process.
3.91%
3.92%
$0
$0 p.a.
80%
Add an offset account for $10 a month
Investors can go from application to approval in as little as 20 minutes with this innovative online lender.
3.97%
3.99%
$0
$0 p.a.
80%
Competitive investment package loan
Package your owner occupied loan with investment loan and receive a discounted investment rate. 100% offset account included.
4.09%
4.87%
$0
$395 p.a.
90%
10% deposit option available
Buy your investment property and set your repayments for the first year. Available in QLD, NSW and ACT only.
3.99%
5.35%
$600
$0 p.a.
90%
Available with a 10% deposit
Competitive rates for fixed for 3 years with redraw facility.
3.93%
3.94%
$0
$0 p.a.
80%
Competitive investor rate with plenty of features
This investment loan keeps fees low, has a sharp interest rate and comes with a 100% offset account.
3.99%
4.14%
$0
$0 p.a.
70%
Competitive investor mortgage for borrowers with a 30% deposit.
4.29%
4.31%
$0
$0 p.a.
80%
Flexible, low fee mortgage
Investors will pay no application or ongoing fees for this interest-only loan.
4.08%
4.09%
$0
$0 p.a.
90%
Low-fee investor mortgage with a partial offset account. 10% deposit option available.
4.18%
4.18%
$0
$0 p.a.
80%
Competitive investment mortgage
Investors get a 100% offset account and pay no application or ongoing fees on this loan from an innovative online lender.
3.99%
3.99%
$0
$0 p.a.
70%
Save on fees with this investor mortgage
Investors with a 30% deposit can get this low rate loan to fund their property portfolio.
4.29%
4.31%
$0
$0 p.a.
80%
Simple, flexible investment product
A simple, variable rate investor loan from an online lender that keeps fees to a minimum.
3.99%
4.62%
$395
$0 p.a.
80%
Flexible fixed investment loan
Investors can enjoy flexible repayments and an easy application process with this pioneering online lender.
4.24%
4.68%
$0
$0 p.a.
90%
Investor loan with a small deposit option
Fix your investment repayments for 1 year. You can get this loan with a 10% deposit. Available in QLD, NSW and ACT only.
4.13%
4.14%
$0
$0 p.a.
90%
Available with a 10% deposit
Access a fee-free offset account and a special interest rate for investors.
4.14%
3.96%
$0
$0 p.a.
80%
Low fee investor mortgage
Investors can go from application to full approval in as little as 20 minutes with this innovative online lender.
4.18%
4.19%
$0
$0 p.a.
80%
Line of credit for investors
Investors can easily access their equity using BPAY, a debit Master Card or cheque book with this interest-only line of credit.
4.31%
3.95%
$0
$0 p.a.
80%
Rapid online application process
A variable interest-only loan for investors. Fast application, low fees, optional offset account. 100% online lender.
4.14%
4.17%
$0
$0 p.a.
80%
Competitive rate for investors
Investors can enjoy flexible repayment options and pay no application or ongoing fees.
3.94%
3.92%
$0
$0 p.a.
80%
Add an offset account for $10 a month
Lock in your interest rate for 2 years and enjoy flexibility, an optional offset account and a fast online application process.
4.29%
4.27%
$0
$198 p.a.
70%
Lock in your investment rate for 3 years
Fund your property portfolio with this fixed rate mortgage which includes a 100% offset account. 30% deposit required.
3.84%
3.91%
$0
$0 p.a.
80%
Flexible low fee mortgage
Enjoy a fast application process and flexible repayment options with this fixed rate mortgage for investing.

Compare up to 4 providers

Aussie Home Loans Logo

Enter your details below to receive an obligation-free quote from an Aussie home loans expert today

finder.com.au respects your privacy

Applications are subject to approval. Conditions, fees and charges apply. Please note that you need to be an Australian citizen or permanent resident to apply.

Credit services for Aussie Select, Aussie IQ and Aussie Optimizer products are provided by AHL Investments Pty Ltd ACN 105 265 861 Australian Credit Licence 246786 ("Aussie"), and its appointed credit representatives. Credit for Aussie Select products is provided by Residential Mortgage Group Pty Ltd ACN 152 378 133 Australian Credit Licence 414133 (“RMG”). RMG is a wholly-owned subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL and Australian Credit Licence 234945. Credit for Aussie Optimizer products is provided by Perpetual Limited ABN 86 000 431 827 (Lender). Credit for Aussie IQ is provided by Macquarie Bank Limited ABN 46 008 583 542 AFSL and Australian Credit Licence 237502. Home loans issued by the Lender are serviced by Macquarie Securitisation Limited ABN 16 003 297 336, Australian Credit Licence 237863 (MSL).

Aussie is a trade mark of AHL Investments Pty Ltd. Aussie is a subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124. ©2018 AHL Investments Pty Ltd ABN 27 105 265 861 Australian Credit Licence 246786.

By submitting this form, you agree to the finder.com.au privacy policy and the Aussie privacy policy.

Aussie Home Loans is both a lender and a mortgage broker, and offers a range of services.

  • FREE Suburb and Property Report with every appointment.
  • Access 3,000+ loans from over 20 lenders.
  • Get expert help with your loan application, including paperwork and eligibility.
  • Over 1000 brokers who are able to help you in your local area.

Aussie Home Loans Lender Logos

The Adviser’s number 1 placed mortgage broker 5 years running (2013-2017)

Shirley Liu

Shirley Liu is a program manager at finder, formerly the publisher for Banking and Investments. She is passionate about helping people make an informed decision, save money and find the best deal for their needs.

Was this content helpful to you? No  Yes

Related Posts

Ask an Expert

You are about to post a question on finder.com.au:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Privacy & Cookies Policy and Terms of Use, Disclaimer & Privacy Policy.
Ask a question
Go to site