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Investors with garden gnomes and barbecues may be able to claim more than $1500 in extra cash flow at tax time, according to a quantity surveying firm.
Buildings and their fixtures and fittings lose value over time as they age and are subject to wear and tear. This decreasing value is considered as an investment loss by the ATO and is offset against an investor’s taxable income.
In fact, it’s not just what’s inside the home that can give property investors a boost. Backyard fencing, clotheslines, sheds and in-ground swimming pools can offer a substantial sum on a depreciation schedule, BMT Tax Depreciation chief executive Brad Beer said.
The humble garden gnome can put $45 into an investor’s pocket at tax time and is one of many overlooked items that can be depreciated. Photo: Must Do Brisbane
“One of the most valuable outdoor assets is the in-ground pool, as it can attract a first year tax deduction of up to $1375 as well as the possibility of additional deductions of around $583 for associated filtration and chlorination systems,” he said.
Outdoor barbecues can attract deductions in the first year of $1478, while outdoor furniture and solar lights are estimated at $800 and $250 respectively. A wheelie bin can also qualify as an immediate $300 write-off.
“Items valued less than $300 can be written off now, while assets which have an opening value less than $1000 in the year of acquisition can be added to a low-value pool,” Mr Beer said.
Outdoor furniture also ranks as a tax break. Photo: Iriana Shiyan
Even investors who have owned a property for just 20 days could claim close to $4000 in the first financial year, he said.
And unless the property was built before September 15, 1987, and remains in original condition, it’s likely there are some depreciation benefits to claim, Property Tax Specialists principal Shukri Barbara said.
While depreciation benefits tend to be higher for new properties and those that have been furnished, even older properties can have thousands of dollars worth of depreciation, he said. This is particularly the case when the home has been renovated.
Even wheelie bins can be a tax break. They don’t even need to be the right way up. Photo: Ken Irwin
“The depreciation return pushes some people into positive cash flow for a particular property,” Mr Barbara said.
But it’s not just experienced investors with significant portfolios who should consider their depreciation benefits, Raine & Horne executive chairman Angus Raine said.
“Investors often make the mistake of postponing a depreciation schedule until the following financial year,” Mr Raine said.
“As soon as you settle on a property that you plan to use for investment purposes, seek out the advice of a depreciation specialist, such as a quantity surveyor, who can use their knowledge of depreciation legislation to maximise deductions for partial year periods as well,” he said.
Many investors also factor depreciation into their calculations when looking to purchase, he said.
The depreciation potential of a property is often a factor in an investor’s decision to acquire a rental property, according to Mr Raine.
“This is because the deductions for wear and tear can assist with minimising the costs involved in owning an investment property.”
What else can you claim?
1. Outdoor furniture
2. Solar lights
3. Wheelie bins
4. Freestanding barbecues
5. In-ground swimming pools
6. Spas
7. Clotheslines
8. Sheds
Source: BMT Tax Depreciation