WHAT IS TAX DEPRECIATION? As a building gets older they wear out, basically they depreciate. The ATO allows owners of income producing properties to claim this depreciation as a deduction against their assessable taxable income. A quantity surveyor is the best professional to help calculate these deductions as recognized by the ATO. There are two areas of depreciation available : Plant and Equipment (Division 40) Capital Works Allowance (Division 43)

PLANT AND EQUIPMENT (DIVISION 40) Available to all investments properties, for new and second hand, regardless of age. No matter how old the property is, there will be deductions entitlements for plant and equipment items Legislation allows plant to be revalued and given new effective lives from date of settlement. ATO has list of effective lives for all the different types of plant and this list also determines what is considered plant and what is not. Plant and equipment be depreciated two ways, diminishing value method and prime cost method. Rates of depreciation are determined by the effective life of the asset. Individual items with a value less than $300 can be written off in first year Other items with a value less than $1000 can be put into Low Value Pool and depreciated at 18.75% first year and 37.5% following years.

Examples of Plant & Equipment items Air conditioners Blinds and curtains Light fittings, ceiling fans, security systems Carpets, vinyl, floating timber floors and other removable floor coverings Kitchen appliances, ovens, cooktops, rangehoods, dishwashers etc. Hot water systems, solar panels and many more

CAPITAL WORKS ALLOWANCE (DIVISION 43) Commonly known as building allowance, this deduction is for any capital expenditure incurred in constructing, altering or refurbishment of a building, built after 18 July Also includes structural improvements such as driveways, fences, retaining walls etc. built after 27 February Unlike plant and equipment, building allowance is based on historical construction costs. Effective life of a residential property is 40 years presently, so they are depreciated at 2.5%. Building allowance is depreciated using prime cost method of depreciation.

Rates of Depreciation Table

Benefits of using KC Partnership? You get a qualified quantity surveyor preparing the report. We do a detailed site inspection of your property and common areas if applicable This is important part of the process as it identifies all the plant and equipment that is claimable, which helps to maximize the deductions. Our reports are ATO compliant and come with a 40 year summary of claims and 10 years of written down values on plant and equipment. If you have any queries about the report you can talk directly to the QS who prepared it. We have a fast turnaround and provide you with an electronic copy of the report.

Example 1

Example of property investor benefits.

Example 2

Example 3

Example 4

Call us on or visit