Tax depreciation is an aspect that can affect your business in numerous ways. However, many property owners fail to understand the impact of tax depreciation. There are several important reasons why you should care enough to know about tax depreciation.
One of them is the impact it can have on your total tax bill. Many investors are struggling to reduce costs and taxes legally without hurting their cash flow. Well, the secret lies in commercial property depreciation.
But first, let us start with the basics and understand what tax depreciation is all about. Read on to find out more.
What Is Tax Depreciation?
Tax depreciation refers to the collectible tax deductions for the tear and wear of income-producing assets. Investors are always looking for legal ways to reduce the taxes they pay. But very few know that tax depreciation is the key to paying fewer taxes.
Although you could be claiming all the expenses related to management, it does little to reduce your taxes. If you are looking for a way to break even, then getting a tax depreciation schedule can be your solution. It can even help you get a refund.
But How Does Tax Depreciation Work?
Indeed, investment properties can appreciate over time. But certain aspects of the property will instead go down in value (depreciate). It includes buildings, assets, and you can claim this depreciation as a tax deduction yearly.
The tax deduction is made over against the property’s income the same way you can deduct the expenses of the property. These expenses include maintenance and repair costs. However, this does not mean that you need to incur a price for you to claim the tax deduction. Instead, a quantity surveyor can calculate the tax deduction for you.
The quantity surveyor will then give you a tax depreciation schedule. When your accountant is completing tax returns, you can provide them with the report. The account can then include the deductions in the tax returns. It may surprise little your tax bill will read afterward.
What is a tax depreciation schedule? It is an inclusive report that summarizes the values of assets and construction costs of a property. It also entails the annual depreciation value because of wear and tears as well as aging. However, it is common to refer to it as a rental property depreciation report or a quantity surveyor report, or even a capital allowance and tax depreciation schedule.
Although not all the tax depreciation schedules are the same, here is a list of what a quantity surveyor can include helping you maximize your deductions;
- Clearance and scraping of items where it is appropriate.
- Immediate write off assets.
- Assembling of any low value or less costly investments to help make depreciation claims of previous years faster.
- Recording prime cost methods of depreciation as well as any falling value. You can also get a graph of the results so that you can easily compare them.
- At least four decades of estimated deductions.
- A report that separates and identifies any staged capital works or improvements. That also includes before and after renovations.
- individually cataloged assets values.
- listed division 40 assets depreciation so that you can apply against CGT at sale
Why Is A Tax Schedule Important?
A tax schedule is essential because it summarizes all the deductions you can claim for your building write-off, plant, and equipment. And all these you can claim when you are completing your tax return. It is also essential that the estimates of the deductions are correct and assessed in the right way.
Although your accountant can easily calculate the deductions using invoices and receipts, the Australian tax authority does not recognize them as qualified to estimate the assets’ value and building costs. To comply with the ATO’s guidance, a professional should do the estimation and calculation for you.
Contact us today for your professional Tax Depreciation gold coast needs. Our skilled team of skilled experts is ready to help you get a refund whenever possible. We specialize in a tax deduction, and we are knowledgeable, professional, and experienced in the field.
As the country’s leading provider of depreciation services, our customer service and customer support is outstanding. And we would love to answer any questions you have on the process of estimating and making the report. Feel free to contact us today for the best taxation services.
Eric Reyes is a passionate thought leader having been featured in 50 distinguished online and offline platforms. His passion and knowledge in Finance and Business made him a sought after contributor providing valuable insights to his readers. You can find him reading a book and discussing current events in his spare time.