NBtax Tax Bites

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Time for property investors to get their head out of the sand.

LINKEDIN ARTICLE BY KATH HEMPHILL

Property Tax Depreciation; simple and rewarding, but often overlooked. This is one area even experienced property investors struggle to understand. According to recent mortgage lending stats, the majority of property investors in Australia under-claim the available depreciation, and many don’t claim at all. 

Yet it’s surprisingly simple and lucrative, says Peter Guerra, Senior Manager of the tax team at Napier & Blakeley in Sydney. Like most things, it’s all about the people. 

“Finding the right property tax advisor sets you up for the life of your investment. An experienced and registered tax depreciation specialist has the skills to obtain the maximum return while still staying compliant. And most importantly, you can relax knowing it’s all being looked after. The basics are fairly simple," said Peter. 

Property tax depreciation (or ‘capital allowances’) are deductions that reduce your taxable income, cutting your tax bill and putting more cash in your pocket. There are two types of allowances:

- Depreciation on plant and equipment – items within the building like carpets, lifts, and whitegoods, and
- Building Allowances – primarily based on the structure of your asset. Claims for these are dependent on when the building was built. As a rough guide, commercial properties built after July 1982 and residential properties built after July 1985 are eligible for deductions

Every property is different, of course, and that’s why using qualified and registered tax surveyors is crucial. The Australian Tax Office (ATO) has specified that quantity surveyors are the professionals best qualified to estimate deductions – and they must be registered tax agents. 

Site inspections are another factor vital to compliant reporting. A detailed inspection substantiates the assets and value of the property, and ensure we claim every possible deduction. And we photograph and document our inspections to verify our claims in case of an audit. It’s all about maximum return and peace of mind.

How much you can claim depends on a number of factors, including the type of property as well as purchase date and price. Every investment property has deductions that the owner can claim, and they’re often in the thousands. Over the life of the property this can make a huge difference to the return on your investment.

Who you choose to work for you will make a tangible difference over the life of your investment. As well as qualifications and experience, a diligent team stays up-to-date with ATO developments. NBtax by Napier & Blakeley has a dedicated research team who advises all our consultants of ATO rulings and revisions – we make sure we’re current and informed.

"The aim of the game here is to maximise deductions yet remain compliant. That’s where experience comes in. We were the first company in Australia to specialise in property tax depreciation, and we’re still the market leaders. Some of our clients have been with us for decades, and it’s been great to be a part of their success," said Peter.

The lesson here is clear – this is a job for the professionals, so all you need to do is a bit of research and choose your team. Get it right throughout your investment career, and you’ll make life a whole lot easier – and more profitable.