Make the most of tax deductions

With tax time around the corner, property investors should thinking about getting their depreciation schedule in order. Data from BMT Tax Depreciation Quantity Surveyors shows that even older properties can provide investors with lucrative tax breaks, with all properties, of varying ages, receiving an average first full-year deduction of over $9000 last financial year.

Deductions are typically higher for newer properties, as owners are entitled to claim capital works for 40 years after the construction date. If you recently purchased an older dwelling (still constructed after September 15, 1987), you have only the 40 years from the construction date to claim capital works, so if time is running out it’s worth seeing what you can get back this year. Despite this, BMT data shows that the newer/older property split among its clients was relatively even in the last financial year.

While there are restrictions on capital works deductions based on the age of the property, there are no restrictions for plant and equipment. According to BMT, between 15% and 35% of the construction cost of a residential building is made up of plant and equipment such as hot water systems, heaters, solar panels, air-conditioning units, blinds and curtains, light shades, swimming pool filtration and cleaning systems, and security systems.