MANY COMMERCIAL PROPERTY INVESTORS may also own a rural property. And yet, are often unaware of the full extent of depreciation benefits that they can gain.
Due to the gradual wear and tear of a building’s structure and the plant and equipment assets contained within a property over time, the Australian Taxation Office (ATO) allows the owners of any income producing property to claim a deduction in the form of depreciation.
Depreciation deductions apply to all types of income producing property, including residential houses, apartments, industrial sheds and commercial offices.
This even applies to agricultural and rural properties used for primary production.
Research shows that 80% of all investors fail to maximise the deductions that can be claimed due to property depreciation.
The owners of agricultural properties in particular are often unaware of the benefits that tax depreciation deductions will provide them with.
However, by claiming depreciation, thousands of dollars can be saved each year.
Easy Cash Flow Boost
Maximising depreciation is an easy way to increase cash flow for farm and rural property owners.
To ensure that rural property owners capitalise on the deductions available, it is recommended they consult with a specialist Quantity Surveyor to request a tax depreciation schedule outlining all of the deductions they can claim.
Examples of depreciable structures and assets which can be claimed on rural properties.
|Fences||Sheep & cattle yards||Dams|
|Water troughs||Horse shelters||Homesteads|
|Irrigation assets||Livestock grids||Crops|
Important Rules to Note
The general rules of depreciation apply to most assets used in primary production however there are certain types of assets in which deductions are calculated according to specific rules including:
- Facilities used to conserve or convey water
- Horticultural plants
Owners of vineyards, orchards or other rural properties which contain the above assets should discuss deductions for these assets with their specialist Quantity Surveyor.
Real deductions, real returns.
The table below shows an estimate of the likely deductions a farmer could claim for a 6,000 hectare property used for cattle livestock.
Depreciable items found on the property included fencing, two tractors, a machinery shed, a hay shed, two cattle yards, water troughs, horse shelters, livestock grids, feed silos, two dams and the homestead.
It is important to note that depreciation deductions vary significantly in properties used for primary production due to the types of assets found and the variety of property sizes.
Always speak with a specialist Quantity Surveyor to get a detailed estimate of the deductions available for your property.
Alternatively, request a depreciation schedule which will outline all of the deductions which can be claimed when completing your annual income tax assessment with an Accountant.
A customised depreciation schedule will:
- Include a site inspection by one of our professionally trained staff to ensure every deduction is found.
- Last the life of the property (forty years).
- Use legislation specified for specific agricultural industries to maximise deductions.
- Provide alternate methods of depreciation to suit the property owners individual scenario.
Bottom Line: You need to contact a Quantity Surveyor who specialises in property depreciation who can help you (as a rural property owner) to maximise your cash return.