PROP­ERTY IN­VESTORS LOSE $17.5 BIL­LION

Business First - - NEWS -

Aus­tralian in­vestors could be claim­ing an ex­tra $5,000 per prop­erty at tax time by fol­low­ing a few sim­ple steps, ac­cord­ing to Mark Kil­roy, di­rec­tor of tax de­pre­ci­a­tion quan­tity sur­vey­ing company Koste. The Aus­tralian Tax Of­fice (ATO) is sit­ting on $17.5 bil­lion in un­claimed tax de­pre­ci­a­tion en­ti­tle­ments this year alone.

“Only 40 per cent of in­vestors are tak­ing ad­van­tage of prop­erty tax de­pre­ci­a­tion sched­ules with av­er­age an­nual claims of just over $3,000 – this is thou­sands lower than the av­er­age an­nual claims of $8,000,” says Mr Kil­roy.

“In­vestors are sim­ply un­aware of the ben­e­fits and the thou­sands of dol­lars they could be claim­ing in en­ti­tle­ments.

“They’re miss­ing the op­por­tu­nity to re­duce their tax­able in­come, as they may be self-as­sess­ing claims or un­der­valu­ing their en­ti­tle­ments.”

Mr Kil­roy says quan­tity sur­vey­ors who pre­pare tax de­pre­ci­a­tion sched­ules should ac­tu­ally visit the prop­erty rather than use data gath­er­ers, and with­out a skilled tax de­pre­ci­a­tion sur­veyor, the value of as­sets and whether they are el­i­gi­ble is of­ten over­looked.

In­vestors’ de­pre­ci­a­tion ben­e­fits vary de­pend­ing on the type of build­ing, its age, fit out and use. ATO leg­is­la­tion states that the owner of a res­i­den­tial in­vest­ment prop­erty can only claim cap­i­tal works de­duc­tions if con­struc­tion com­menced after 18 July 1985.

How­ever, a majority of prop­er­ties in Aus­tralia have had some sort of cap­i­tal works car­ried out post 18 July 1985 and will qual­ify for de­duc­tions. Th­ese ad­di­tions are con­stantly over­looked but can have a sig­nif­i­cant im­pact on your en­ti­tle­ments.

De­pre­ci­a­tion of plant and equip­ment on the other hand is not limited by age, rather it is the con­di­tion and qual­ity of each item which con­trib­utes to the de­pre­cia­ble amount es­tab­lished by a qual­i­fied quan­tity sur­veyor.

“If your prop­erty is el­i­gi­ble for de­duc­tions and you’ve never claimed de­pre­ci­a­tion, you could be en­ti­tled to a sub­stan­tial back claim,” says Mr Kil­roy.

“For ex­am­ple, one of my clients who’d never claimed de­pre­ci­a­tion on a newly built $450,000 prop­erty claimed up­ward of $14,000 in the first year and an av­er­age of $9,500 ev­ery year there­after.

“Koste quan­tity sur­vey­ors iden­tify and value cap­i­tal and struc­tural works car­ried out post orig­i­nal con­struc­tion and pos­sess de­tailed knowl­edge of the cur­rent leg­is­la­tion sur­round­ing plant and equip­ment to max­imise tax de­pre­ci­a­tion for clients.”

The prepa­ra­tion of a tax de­pre­ci­a­tion sched­ule should be car­ried out by a qual­i­fied quan­tity sur­veyor who has the ex­per­tise to cal­cu­late build­ing con­struc­tion costs. Tax rul­ings clearly state that valuers, real es­tate agents, ac­coun­tants and solic­i­tors do not have the ex­per­tise to make such an es­ti­mate of costs.

Mr Kil­roy says all Koste sur­vey­ors are qual­i­fied quan­tity sur­vey­ors who spe­cialise in tax de­pre­ci­a­tion sched­ules for both res­i­den­tial and com­mer­cial clients Aus­tralia wide.

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