The most important aspect is that a depreciation report from a registered quantity surveyor allows you, the investor, to claim a tax deduction on listed items. This can increase your cash flow and provide an opportunity to grow your wealth. In the long run you may need this cash to replace defective items, but until that time the cash can be put to work elsewhere.
Most investors are aware of the benefits of a depreciation report on new properties as things such as carpets, hot water systems, blinds, ovens etc. have significant value and can be depreciated (written off) over the future years. But what happens when you buy an old property where someone else has already written everything they can down to zero? As the new owner you entitled to reassess things via a qualified quantity surveyor in the first 2 years of owning it.
Available on older homes
Investors typically miss millions of dollars of deductions each year due to a common error when assessing their property for depreciation services. That error is to assume that some plant and equipment is already depreciated in value to zero and should be replaced. Regardless of the age of the property (and the plant and equipment in that property), there will always be deductions that can be claimed by a savvy investor.
These may include building improvements (renovations) and/or the value of the plant and equipment associated with the property (irrespective of age). At the date of settlement, the plant and equipment in an investment property (for example, blinds, carpets, stovetops and hot water systems) is given a new effective life and beings to depreciate again. Typically, this revalued plant and equipment qualifies for either immediate write off or low value pool deductions and will give substantial return in the first few years.
A classic example for an older property would be a well maintained hot water system that could be assessed to have another 5yrs life and an intrinsic value greater than the previous owner may have been using. When combining items like these, it is not uncommon for a depreciation schedule on an old house to itemise over $10,000 of deductions in the first 4yrs, making it well worth the cost of the schedule. Effectively, your depreciation report will pay for itself.
Whether it’s new or old, call us and we will arrange a FREE quote.