What is a tax depreciation schedule and why do you need one?

A tax depreciation schedule is a report outlining the depreciation of assets in your investment property. It is used to calculate available tax deductions for wear and tear on the home and its assets. A depreciation schedule should always be prepared by a qualified quantity surveyor, and is well worth the one-time investment, as it can be used to claim deductions for up to 40 years. 

Critically, a depreciation schedule will help you maximise deductions, resulting in significant tax savings. To demystify the value we’ve compiled a list of reasons why getting a tax depreciation schedule is essential for your investment:

Claim all available deductions

A tax depreciation schedule can help you claim all available deductions for your investment property. The schedule will identify all assets in the property that can be depreciated, such as the building, fixtures, and fittings. This can help you maximise your deductions and reduce your tax bill.

Save money

By claiming depreciation, you can save money on your tax bill. Depreciation is a non-cash deduction, which means it doesn’t require you to spend money to claim it. This can result in significant savings over time which can help you cover expenses related to your property, such as maintenance, repairs, and mortgage payments.

Maintain property’s value

By getting a tax depreciation schedule, you can identify assets that need to be replaced or upgraded. This can help you improve your property’s value and attract future tenants. It may also help you achieve a greater price if you sell your property in the future.

Meet legal requirements

As an investor, you are legally obliged to accurately report your income and claim all available deductions. A tax depreciation schedule can help you meet these requirements and avoid penalties for underreporting or failing to claim deductions.

In summary, getting a tax depreciation schedule for your investment property is a smart move for any investor. It can save you money, help you claim all available deductions, improve your property’s value, and meet legal requirements. To ensure that you get the maximum benefit from your tax depreciation schedule, it’s important to work with a qualified quantity surveyor who specialises in preparing these schedules. We recommend BMT Quantity Surveyors.

If you would like to discuss the management of your investment portfolio please get in touch with us: 

Dani Shields, Residential Property Management Consultant in Hobart or Allison Latham, Residential Property Management Consultant in Launceston.