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Investors are missing out on thousands of dollars’ worth of potential tax savings, with 80 per cent failing to claim depreciation on investment properties, according to Raine&Horne and quantity surveying firm BMT Tax Depreciation.
Raine&Horne chief executive Angus Raine is urging property investors to be proactive about determining depreciation on rental properties before June 30.
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“Many investors do not understand how to properly claim depreciation on residential properties”, Mr Raine said.
“Anecdotal evidence from our network of offices and the experience of BMT Tax Depreciation shows around four out of five landlords overlook this entirely legitimate tax deduction, thereby paying far more in tax than necessary.”
As a guide to the potential tax savings, BMT indicates that an investor could claim cumulative depreciation of approximately $50,000 in the first five years on a new two-bedroom unit costing $400,000.
According to Mr Raine, investors can claim building depreciation on a surprisingly broad range of rental property items including built-in kitchen cupboards; clotheslines; door and window fittings; driveways and garages; fences and retaining walls; and sinks, basins, baths and toilet bowls.
“They can also claim depreciation on carpets, vinyl, and linoleum, as well as hot water systems, heaters, solar panels and air conditioning units,” Mr Raine said.
“Many also forget that blinds, curtains and light fittings are depreciable items, as are security systems.”
Apartment investors may also be able to claim depreciation on common property such as lifts and even gym equipment.
