MELBOURNE IS WELL KNOWN for its amazing selection of shopping, dining and entertainment. Consequently, more and more commercial property owners have joined the renovating bandwagon to produce popular hotspots for both local residents and those visiting.
However, many property owners are often unaware of the significant benefits from claiming depreciation after renovating a property (whether it's a shop or office), which is generating an income.
With today's current economic climate, renovating can be a daunting process. And so, it makes financial sense to ensure you take full advantage of the tax depreciation deductions available.
Old Fixtures & Fitting are Valuable
As a building gets older, items contained within a property wear out and subsequently depreciate in value.
And even though property owners can claim depreciation on any income producing property, it is particularly important to claim depreciation during a renovation.
In order to make the most out of an investment property, owners should consider a pre-renovation depreciation schedule.
Assets being removed can be worth thousands of dollars in depreciation claims. When old assets such as carpet, blinds and cabinets are removed, the owner may be entitled to claim the remaining depreciation as a tax deduction.
Don't Forego Your Full Entitlement
A specialist Quantity Surveyor (QS) can calculate values and construction costs to ensure owners are not throwing dollars away.
Essentially, the removal and disposal of assets from any income producing property can be written-off as a tax deduction using remaining depreciable value.
Therefore, engage a QS to complete a schedule prior to any renovation or refurbishment and thereby, accurately identify the value of all the assets you're planning to scrap.
Then, a 2nd schedule will be prepared post renovation to calculate the depreciation deductions available over the new assets individual effective life; plus, any capital works building deductions available to be claimed.
Bottom Line: Just make sure you to take full advantage of depreciation claims when renovating -- because depreciation can significantly improve your underlying taxable income.