There are two main areas to property tax depreciation; the plant & equipment and the capital works deductions.
Plant & equipment (also known as Division 40) are items that are usually mechanical fixtures or those which can be easily removed from the property as opposed to items that are permanently fixed to the structure of the building.
Plant and equipment items include but are not limited to: Hot water systems, Carpets, Blinds, Ovens, Cooktops, Range hoods, Garage door motors,
Door closers, Freestanding furniture, Air-conditioning systems, Unfixed lighting, BBQ’s, Heaters and Flooring (floating floor boards).
The value ascribed to the Division 40 items relates to the purchase price of the property.
Capital Works Allowances (also known as Division 43) are a deduction for the structural elements of a building. It is based on the historical construction costs of the building and includes materials such as, but not limited to:
Bricks, Mortar, Plaster walls, Flooring (fixed timber flooring), Wiring, Doors, Tiles, Windows, Toilets, basins, shower hobs, Guttering, Roofing, Concrete slabs, Foot paths and Driveways.
From the date construction was completed the Australian Taxation Office (ATO) has determined that any building eligible to claim capital works deductions has a maximum effective life of 40 years.
Therefore, investors can generally claim up to 40 years of property depreciation on a brand new building, whereas the balance of the 40 year period from the construction completion date is claimable on an older property.
Importantly, you can claim renovations completed by previous owners of the property. Anything in the property that occurred in a previous renovation can be inspected by one of our inspectors. Our Quantity Surveyors will then estimate the renovation costs and then calculate the deductions accordingly.
This includes items that are not so obvious, for example: New plumbing, Water proofing and Electrical wiring.
For capital improvements to be eligible for capital works deductions, construction must have commenced within the qualifying dates which are after the 18th July 1985 for residential buildings, and after the 20th July 1982 for commercial buildings.
In need of a property tax depreciation schedule? Click here to order your schedule now.
Click here to find out how depreciation can help you.