Don't throw away depreciation tax breaks for buildings, fixtures and fittings

Property investors who fail to claim all of their deductions for the decline in value of depreciating assets are “needlessly paying too much tax”, warns Paul Banister, tax partner with accountants Grant Thornton in Brisbane.

Banister says it is far easier for investors to overlook depreciation deductions when investing in existing buildings rather than new buildings where the costs are more readily apparent.

Many residential property investors fail to claim deductions for building depreciation, adds Spyros Kotsopoulos, a Sydney tax partner with accountants Deloitte.

And Ken Raiss, a director of national accountants Chan & Naylor, suggests that property investors ask a quantity surveyor to prepare an accurate depreciation schedule.

Raiss advises investors who are undertaking renovations to have a “scrapping schedule” to identify and put a value on what is thrown away.

“This is then written off in the year of the renovation, plus you can also depreciate the new work thereafter,” he adds.

Raiss suspects that not many property investors prepare a scrapping schedule when renovating and therefore throw away valuable immediate deductions.

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