Commonly Asked Questions About the Australian Property Depreciation Schedule
When preparing your taxes that involve any type of commercial or rental property, you may be allowed to depreciate the value of that property every year, according to a depreciation schedule. This can lower your tax bill, as property taxes are typically calculated according to a building's overall value as well as the value of equipment and other such pieces and features of a commercial property. If you can depreciate that value, your taxes are lower. Speak to an accountant about how to depreciate your building in particular, but note a few commonly asked questions about this process in the meantime.
What can be claimed as depreciation?
The building itself can be claimed under the depreciation schedule, but so can equipment and fixtures. This would include the HVAC system, plumbing, and the like; for rental buildings and complexes, this might also include a laundry room, swimming pool, workout center, and other such features. If you're unsure of what can be claimed, an accountant can note different features and pieces of equipment that are often claimed in your type of building and if this claim would apply to your property.
Why have a property inspected and by whom?
While an accountant can tell you what features of your property may be claimed as part of your depreciation schedule, a quantity surveyor can go over all aspects of your property and note what can be claimed on that depreciation schedule, and may also advise you as to how much of a depreciation you might claim. A quantity surveyor is familiar with the financial aspects of constructing and owning commercial buildings, so they can often give you exact information about property values as well as current values of fixtures and other such features on your property. Their report can assist you and your attorney with arriving at the exact figures you will use for a depreciation schedule. Have your property inspected by a quantity surveyor every year that you're allowed to depreciate your property so you know what figures to use on your tax returns.
What is pooling?
Pooling is a way of getting a higher depreciation amount for features and fixtures in a commercial or rental property. You can pool or group together certain items and use a depreciation amount for all those items at once, rather than item by item. There is an accelerated rate of depreciation that you can use for pooled items. An accountant can note which items are eligible for this pooling depreciation and how it can work to maximize your returns and the overall deduction you take.