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Tax breaks for new owners

02 June 2014 Staff Reporter

Investors who have recently purchased property can make a depreciation claim straight away, with one owner entitled to $5,000 in less than a month.

According to BMT Tax Depreciation managing director Bradley Beer, even if a property has been purchased towards the end of a financial year, valuable deductions are available for the owner.

“Investors often make the mistake of postponing organising a depreciation schedule until the following year. However, a specialist quantity surveyor will find ways in which partial depreciation deductions can be maximised, resulting in extra cash for the owner,” said Mr Beer.

Quantity surveyors use legislative tools to make partial-year claims more beneficial through immediate write-offs and low-value pooling.

Any item added to a property which cost $300 or less can be immediately written off within the first year, regardless of how many days the property is owned and rented in that year, according to Mr Beer.

Low-value pooling can be applied to two different types of asset: low-cost assets and low-value assets.

A low-cost asset is any depreciable asset that has an opening value of less than $1,000 in the year of acquisition.

Low-value assets are depreciable assets which have a written down value of less than $1,000. That is, the value of the asset is greater than $1,000 in the year of acquisition, but the remaining depreciable value after the previous years' claims has been reduced to under $1,000.

“Placing items in a low-value pool allows the owner to accelerate the rate of depreciation. In the year of purchase the owner can claim these assets at a rate of 18.75 per cent, and they can claim these assets at a rate of 37.5 per cent from the second year onwards,” said Mr Beer.

For investors, organising a depreciation schedule immediately after settlement is encouraged because the report will include a partial-year claim based on the exact time the property has been owned and rented.

Tax breaks for new owners
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