Many investors are simply unaware of the legitimate claims that can be made in terms of depreciation deductions. It is quite possible to claim depreciation for improvements, but you must enlist the help of a quantity surveyor to develop a depreciation schedule of your assets in order to have your claims accepted by the Australian Tax Office (ATO).
H&R Block recently revealed some common mistakes regarding taxation and property investment.
“The complexity of income tax means getting it wrong can be disastrous for investors. However, getting it right, and getting affairs into order, provides an opportunity to maximise tax refunds,” H&R Block regional director Frank Brass said in a statement issued on Monday (September 17 2012). The global accounting firm released a Tax Guide for Property in an effort to assist investors with their tax filing.
Among some of the advice Mr Brass had for financiers, he said investors should be wary of offering ‘mates’ rates’ when dealing with family and friends, because this can lead to a lower claim on tax forms.
Another common mistake Mr Brass referred to was regarding home additions.
“The other key area is where investors build a pergola, driveway, garage, or put in a new fence. They expect to make a claim that year for their costs, but the ATO treats them as capital expenses and they are depreciated over 25 or 40 years,” he said.
“This oversight can scuttle many investors’ budgets.”
This highlights the value of knowing the ins and outs involved with depreciating assets and how best to account for them each year.
At Portfolio Management Services, we ensure that your end of year statement is comprehensive to assist with any accounting needs. If you require more information speak to our Property Management Director today on 03 96211044 or go to Contact us.