Frequently Asked Question
My property has been refurbished. Can I depreciate these costs?
Depreciation is likely higher for older properties that have had renovations, like installing a new kitchen or bathroom. If you don’t have any invoices to include in your depreciation schedule, our Quantity Surveyor can nevertheless determine how much the works cost.
How do you estimate the costs for the depreciation schedule?
Under TR 97/25, the ATO acknowledges that Quantity Surveyors are one of the few professions who have the requisite knowledge to determine the cost of assets for depreciation purposes. Our depreciation schedules accurately estimate the historical building costs based on our large cost databases and in-house resources, and we generate them for all property kinds.
What is the difference between a depreciation report and a valuation report?
When filing your taxes, you can take advantage of the yearly tax depreciation of your investment property over a series of years by referring to a depreciation report. Depreciation is computed using the original construction cost less a reasonable discount for the purchase price.
A valuation report shows the value of your property at a specific time that you can use to calculate your capital gain or loss when you sell the property. The valuation of a property is based on the market condition and many other attributes.
If the building is older than 10 years, should you still get a depreciation report?
This will depend on the situation’s specifics and the date you made the purchase (referring to the next question). Capital structures will be depreciated over a period of 40 years, beginning with the date of construction and including any subsequent alterations. It’s important to note that the property’s condition also affects the depreciation value.
What kind of depreciation should I consider now that my main residence is also an investment property?
Schedules using both the prime cost method and the diminishing value method are presented, each covering a period of 40 years. It is ATO policy to determine the effective life of capital allowances and capital works. Since the annual depreciation amounts will remain the same regardless of the number of years displayed, this is an acceptable solution.