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Property investors missing out on tax deductions

21 May 2014 Staff Reporter

With the end of the tax year fast approaching, rental property owners have been urged not to overlook deductions they could be claiming when completing their annual income tax assessment.

According to Bradley Beer, managing director of BMT Tax Depreciation, two types of deductions available to property investors which continue to be missed are capital works deductions and plant and equipment depreciation.

The call comes after the Australian Taxation Office (ATO) recently released statistics relating to claims made by Australian property investors for the 2011-2012 income year.

The statistics showed that some of the deductions claimed included body corporate fees, agent fees and commissions, council rates, borrowing expenses, interest on loans, repairs and maintenance, gardening expenses, pest control, capital works deductions and plant depreciation.

Mr Beer said approximately 2.5 million property investors claimed deductions that year, and of these investors, just over one million received an average capital works deduction of $2,029, while just over 1.7 million investors claimed an average deduction of $1,139 for plant and equipment depreciation.


“A total depreciation claim of $3,168 on average is well below the typical claim found for investors who request a BMT Tax Depreciation Schedule," said Mr Beer."Data collected from our schedules suggests the average claim should be around $10,105 in the first full financial year and $7,367 per year on average over the first 10 years of owning a property."

He advised that although not all investment owners are eligible to claim capital works deductions due to ATO restrictions placed on a property’s construction commencement date, investors can still claim substantial depreciation deductions for plant and equipment items regardless of their property’s age.   

"We’re continuing to see a trend that suggests the owners of older properties don’t claim the maximum capital works deductions available. Older properties have often had renovations completed. Even work completed by a previous owner of the property can be claimed as a capital works deduction by the current owner,” said Mr Beer.

Property investors missing out on tax deductions
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