If you moved out of your home this year and continue to hold it as a rental, it’s no longer your Principal Place of Residence (PPOR) and you are eligible to start claiming all the deductions an investment property entitles you to.
That means it’s a smart move to have a tax depreciation schedule completed on the property to ensure you are claiming everything you can.
It’s not uncommon for property owners to eventually move from their own home, rent it out, and buy or rent another property to live in. When this happens, the former property becomes eligible for tax depreciation from the day it goes on the rental market.
For example, if your PPOR became available to the rental market on April 1 in a given year, as an investor you can claim tax depreciation for the months of April, May and June in that financial year.
Investors are eligible to claim both Division 43 (Capital Allowances) and Division 40 (Depreciable Assets) allowances and importantly, any improvements or additions completed in the previous 30 years or so are eligible to depreciate.
A tax depreciation schedule takes all of this into account and any works done to the property before you purchased it will be dated and costed by quantity surveyors for inclusion.
For example, a kitchen and bathroom upgrade, or the construction of a deck or garage completed prior to renting, not only increase market and rental value but also increase the tax depreciation claimable on your investment, making those improvements even more worthwhile.
Using applicable sections of the taxation act and relevant case law, Capital Claims Tax Depreciation’s qualified Quantity Surveyors understand how to structure a tax depreciation schedule to ensure claims are minimised most effectively during the time the property is a PPOR and maximised during the years the property is an investment.
And, even if your PPOR became an investment a couple of years ago, you can still back claim for between two and four years (depending on your circumstances), with any renovations you did to the property will be included.
What’s more, if your property is a furnished rental you can also claim tax depreciation for the furniture and any appliances.
It’s important to note that once a PPOR becomes an investment, it will not necessarily be eligible for the same degree of Capital Gains Tax (CGT) exemptions as it was as your home; however, the benefit of claiming depreciation typically outweighs the impact on CGT.
Call Capital Claims Tax Depreciation on 1300 922 220 or visit capitalclaims.com.au to order your tax depreciation schedule and start claiming the deductions you are entitled to.
If you own an investment property, the best way to ensure your depreciation deductions have been maximised is to use a depreciation schedule prepared by Capital Claims Tax Depreciation. For an estimate of deductions you may be entitled to, or to have your current depreciation schedule reviewed free of charge, please don’t hesitate to get in touch.