Quantity surveyors: Increase your investment cash flow
A quantity surveyor can help you squeeze every cent of your tax and depreciation benefits when holding your investment property.
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Find out how a quantity surveyor can help you prepare a depreciation schedule to maximise your cash return from your income-producing asset this financial year.
What is a quantity surveyor?
Commonly referred to as a "construction economist", a quantity surveyor is a licensed professionals that estimate and monitor construction costs of a property. Working closely with architects, financial planners, engineers and accountants, they are typically involved with providing tax depreciation schedules and cost estimations to property owners.
How can a quantity surveyor help me?
A quantity surveyor can help you prepare your depreciation schedule which can maximise your cash return from your investment property. The surveyor will inspect your property, measure and document all depreciable items, estimate the construction costs of the property and determine the value of plant and equipment items such as appliances.
Once they have all this information, they will develop a report with a breakdown of the building allowance costs and plant and equipment item costs.
When the depreciation schedule is finished, you can hand it over to your accountant to complete your tax return.
What is tax depreciation?
As your property gets older and contents within it endure wear and tear, they depreciate in value. The Australian Taxation Office (ATO) allows investors to claim a tax deduction, or tax depreciation, on both the property as well as plant and equipment assets inside.
What is a tax depreciation schedule?
When a quantity surveyor issues an investor's capital allowance and tax depreciation schedule it normally consists of the following elements:
- Capital works deduction. This deduction is available for the structural element of the building which normally includes fixed assets.
- Plant and equipment. For the plant and equipment deductions, these are available for removable assets of the home.
How much can I claim under capital works allowance?
As mentioned above, capital works deduction refers to the property structure and items that are permanently fixed to the property.
For investment and other types of non-residential property, capital works deduction can be claimed at 2.5% or 4% of the property’s historical construction cost.
As a property investor how can I claim depreciation?
To claim depreciation on your investment property, you’ll need to consult a quantity surveyor to complete the comprehensive depreciation schedule which will be used to prepare your tax return.
Can’t I just use my accountant?
While your accountant can give you advice about tax depreciation, they cannot provide you with a depreciation schedule that is needed to claim your tax benefits. Only a quantity surveyor can issue the actual numbers that will form the basis of your tax return.
According to the ATO, if your investment property was built after 1985, you must hire a quantity surveyor to create a depreciation schedule.
You can learn more about quantity surveyors at the website of the Australian Institute of Quantity Surveyors.
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