Maximising Your Investment For Tax Time
For property investors in Australia, optimising your investment is key to long-term success. A strategic approach involves leveraging a property investment depreciation schedule, an invaluable tool that can significantly impact your financial outcomes, especially come tax time.
Understanding Depreciation:
Depreciation, often underestimated in property ownership, plays a pivotal role. Unlike other deductions requiring additional spending, depreciation stands as the largest non-cash property deduction available to investors. Remarkably, it ranks second only to loan interest as a tax deduction, yet a staggering 80% of individuals fail to fully capitalise on it.
Depreciation encapsulates the natural wear and tear of a property and its assets over time. While all properties depreciate, only property investors can leverage this as a tax deduction, allowing them to recover the investment property's cost gradually.
Categories of Tax Depreciation Deductions:
Tax depreciation deductions are categorised into capital works and plant and equipment depreciation.
1. Capital Works Deductions:
Capital works involve the building's structure and permanently fixed items, constituting 85-90% of total deductions. Examples include built-in kitchen cupboards, doors, driveways, and structural elements.
2. Plant and Equipment Depreciation:
This pertains to easily removable or mechanical assets. Claimable items encompass air-conditioning units, blinds, security systems, and other movable components.
Benefits of Claiming Depreciation:
The advantages of claiming depreciation on your investment property are manifold:
- - Reducing Taxable Income: Claiming depreciation aids in reducing your taxable income.
- - Maximising ROI: It contributes to maximising your return on investment.
- - Lowering Tax Liability: Claimed depreciation effectively lowers your tax liability.
Unlocking the Power of a Depreciation Schedule:
A depreciation schedule is a comprehensive report detailing available tax depreciation deductions for residential and commercial properties. This one-time investment provides a 40-year forecast, illustrating depreciable items and depreciation methods. It also offers the opportunity to reclaim missed deductions by adjusting previous tax returns.
Why Work with Experts:
Engaging a specialised company in preparing depreciation schedules ensures expertise in identifying claimable items and collaborating with your tax accountant. The one-off schedule fee is 100% tax deductible and lasts the property's lifetime, making it a prudent investment for optimising deductions.
If you have any further questions regarding investing please feel free to get in touch with Next Level. You can contact us either by calling 0402 866 885 or sending an email to info@nlproperty.com.au. We are here to assist you and are eager to provide any additional support you may need.
