Most property investors are missing out on tax deductions worth thousands of dollars annually

Media Release - Sydney, NSW (5 May 2017) 

Most property investors are missing out on tax deductions worth thousands of dollars annually

  • 80 per cent of investors fail to maximise their depreciation claims.
  • The cost of preparing a tax depreciation schedule is 100% tax deductible.
  • On average, investors can claim between $5,000 and $10,000 in depreciation deductions in the first financial year alone.

As the tax deadline of 30 June 2017 nears, Angus Raine, Executive Chairman of Raine & Horne, encourages property investors to make sure they have a depreciation schedule so they don’t miss out on valuable deductions.

“Research suggests 80% of landlords fail to claim the maximum depreciation deductions available from their investment property,” says Mr Raine.

“Potentially these investors are missing out on thousands of dollars each year, even though the costs of a depreciation schedule, which are usually between $650 and $700, are 100% tax deductible.”

To claim deductions for depreciation, a landlord must submit a depreciation schedule, which is a report prepared by a quantity surveyor assessing the deductions that can be claimed.

Landlords can claim 2.5% of the cost of the building structure annually if construction of the property commenced after 15 September 1987. They can also claim between 10% and 20% against the values of a variety of depreciable items including carpets, blinds, hot water systems, air conditioners, cook tops and smoke alarms.

Additional deductions may be available for structural renovations completed within the legislated dates, even if they were done by a previous owner.  

Investors who bought or built new houses or apartments are in line to potentially reap the greatest rewards of depreciation.

“One important benefit that new homes offer investors is considerable capital depreciation, with up to 60% of the purchase price potentially tax-deductible over the life of the property,” says Bradley Beer, Chief Executive Officer of BMT Tax Depreciation.

“As a rule, the newer the property, the more an investor can claim, making purchasing a near-new house or apartment potentially more worthwhile, in a taxation sense, than an established home, at least for the first five or so years of ownership.”

According to BMT, a brand-new residential home valued at $300,000 could potentially provide a landlord with cumulative depreciation claims for the structural component of $30,000 over a five year period.[i]

Additional depreciation deductions can also be claimed for plant and equipment items within the property.

“That said, every depreciation assessment is different and the benefits are calculated on a
case-by-case basis,” says Mr Beer.

Mr Beer also emphasises that significant tax allowances won’t always offset some of the costs of purchasing or building a brand new investment home, and this is where a tax depreciation schedule can prove useful.

30 June to-do list for landlords

  • Organise your depreciation schedule. If you don’t have one, contact a quantity surveyor. Don’t forget, the cost is fully tax deductible.
  • Before 30 June, check curtains, blinds, window screens, taps and carpets for wear and tear and see if you need to replace anything.
  • Inspect your property, or have your managing agent inspect it, to look for damage or deterioration that you may need to budget to repair in the future. Be sure to especially check railings, bannisters, balconies and hot water services.
  • Review the rent and make sure it’s still in line with the market in your area. Also run your eye over the tenancy agreement to make sure it’s still appropriate.
  • If you own a strata property, go to the annual general meeting so you know what upcoming strata expenses you need to consider in your end-of-financial-year accounting. Also check out the common areas and their upkeep, which will give you a sense of major works that could be completed before June 30 so you can claim a tax break for this financial year.



For further media information contact:

Angus Raine, Executive Chairman, Raine & Horne on 0409 920 697