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Investors missing out on billions in tax entitlements

07 August 2014 Staff Reporter

Australian property investors are missing out on an opportunity to reduce their taxable income by failing to correctly assess their property's annual depreciation.

Mark Kilroy, director of tax depreciation at quantity surveyors Koste, said investors were missing out on an average of $5,000 per property in depreciation entitlements each year.

Mr Kilroy said investors were undervaluing their entitlements and had left the Australian Taxation Office with $17.5 billion in unclaimed entitlements in 2013/2014.

"Only 40 per cent of investors are taking advantage of property tax depreciation schedules with average annual claims of just over $3,000," he said.

"This is thousands lower than the average annual claims of $8,000. Investors are simply unaware of the benefits and the thousands of dollars they could be claiming in entitlements.

"They're missing the opportunity to reduce their taxable income, as they may be self-assessing claims or undervaluing entitlements," he added.

Mr Kilroy said quantity surveyors who prepare tax depreciation schedules could help investors claim deductions correctly.

"I always recommend using a qualified quantity surveyor to carry out the site survey and compile the report — this enables them to provide the client with detailed and accurate schedules, which in turn maximises the claimable amount," he said.

"If your property is eligible for deductions and you've never claimed depreciation, you could be entitled to a substantial back claim.

"For example, one of my clients who'd never claimed depreciation on a newly built $450,000 property claimed upward of $14,000 in the first year and an average of $9,500 every year thereafter," he added. 

Investors missing out on billions in tax entitlements
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