If you are a property investor you have probably heard the term ‘Tax Depreciation Report’ thrown around and wondered what it’s all about. So, what exactly is a Tax Depreciation report, why do you need one and how should you go about it? We are about to tell you all that and more, so read on.
What is a Tax Depreciation Report?
In short, a tax depreciation report is an analysis of an investment property so that investors can work out what deductions to claim on tax. A quantity surveyor from a specialist firm such as Asset Economics will assess your property and prepare a tax depreciation schedule that will list every item in your property that is declining in value. You can then claim for the amount the items in your property have decreased or ‘depreciated’ when you do your tax return.
Why should I get a Tax Depreciation Report?
Essentially, tax depreciation reports help get property investors more money at tax time. The reason getting a professional report done is so important is because there are many things inside a property that most people wouldn’t know you could claim. The items you can claim on tax are not just limited to appliances, but also certain fixtures and fittings. Having a professional conduct this report for you means that nothing is missed and you get the best tax return possible. Sometimes you don’t even have to spend the money in order to claim it, there are likely things that came with your property that you can already claim on.
Some changes to Tax Depreciation legislation
In May 2017, some changes were made to deprecation legislation. The new legislation means that second hand properties purchased after the 9th of May 2017 can no longer claim depreciation on plant and equipment assets. This new legislation has made claiming deductions a little more complicated for investors to know exactly what they can and can’t claim. This is why getting a professional quantity surveyor to prepare a report for you is essential.