Don’t postpone getting a depreciation schedule

Partial year deductions still benefit investors

Often when an investment property is purchased towards the end of financial year the new owner will postpone getting depreciation schedule prepared until next year. However, there are ways in which partial year deductions can be maximised, resulting in extra cash for the owner.

A specialist Quantity Surveyor will use legislative tools to make partial year claims more beneficial to new investment property owners. Here are just a couple of the methods used:

Immediate write-off

An immediate write-off can be applied to any item within an investment property which cost less than $300, regardless of how long the property has been owned and rented.

Immediate write-off items (cost less thank $300)

  • Garbage Bins
  • Garage Door Controls
  • Bathroom Accessories
  • Heat Light & Exhaust Unit
  • Doors Closers
  • Smoke Alarms

Tool used to increase wealth & maximise property deductions

Low-value pooling

This is a method whereby depreciation of plant and equipment assets is claimed at a higher rate to maximise deductions. Low-cost assets valued less than $1,000 can be placed in a low-value pool where they can be claimed at a rate of 18.75 per cent in the year of purchase and 37.5 per cent for each year afterwards, regardless of how long the property has been owned and rented.

The fee to arrange a tax depreciation schedule is 100 per cent tax deductible and if an investor orders a schedule prior to June 30 they can claim the fee straight back in the same financial year. Investors who would like a free over the phone assessment of the available deductions for their investment property should speak to one of the expert staff at BMT Tax Depreciation on 1300 728 726. Article Provided by BMT Tax Depreciation. A tool used to increase wealth and maximise property deductions.

Low-value pooling is a method of depreciating fixtures, fittings, plant and equipment within a property at a higher rate to maximise deductions which will increase an owner’s annual cash flow. The following categories of assets can be allocated into a low-value pool:

Low-cost assets – A low-cost asset is a depreciable asset that has an opening value of less than $1,000 in the year of acquisition. This can include cooktops, rangehoods, exhaust fans and blinds.

Low-value assets – A low-value asset is a depreciable asset that has a written down value of less than $1,000. That is, the value of the asset is greater than $1,000 in the year of acquisition. However, the remaining value after previous years’ depreciation is less than $1,000. Assets meeting this classification are placed in an itemised, low-value pool. An example could include a hot water system valued at $1,100. In the second financial year after installation, the asset would have depreciated to a written down value less than $1,000, which would make it eligible to be placed in the low-value pool.

Property investors who place assets in the low-value pool are able to claim them at a rate of 18.75 per cent in the year of purchase, regardless of how long the property has been owned and rented. From the second year onwards the remaining balance of the item can be claimed at a rate of 37.5 per cent. This rule allows for an increased depreciation deduction on qualifying assets.

Assets which form part of a group with a total cost exceeding $1,000 can cause confusion. For example, if a house has a set of six blinds costing around $3,000, it would seem that the set does not qualify for the extra depreciation available in the low-value pool. However, these blinds can be depreciated at the higher rate as they qualify for the low-value pool as individual items.

A specialist Quantity Surveyor will always use legislation available to maximise depreciation deductions. A BMT Tax Depreciation Schedule will always apply low-value pooling to increase the rate of depreciation, boosting the cash return earlier for the property owner. To find out more, contact one of the expert staff at BMT Tax Depreciation on 1300 728 726.

Article provided by BMT Tax Depreciation. Bradley Beer (B. Con. Mgt, AAIQS, MRICS) is the Chief Executive Officer of BMT Tax Depreciation.  Please contact 1300 728 726 or visit www.bmtqs.com.au for an Australia wide service.