Renovators overlook depreciation benefits

Landlords who rush into renovations may be missing out on thousands of dollars worth of tax write-offs, according to the director of a quantity surveying firm.

Tyron Hyde from Washington Brown said investors frequently fail to consider depreciation before doing structural renovations on their rental properties.

“If they're going to renovate a property that has been income-producing prior to renovating it, they might want to consider getting a quantity surveyor to see if there is any value they can attach to what they're about to throw out,” he said.

If a property was constructed after 16 September 1987, investors may be able to claim depreciation on the structure as a tax deduction spread out over 40 years.

Before tearing out old kitchens or bathrooms, Mr Hyde suggests commissioning a “scrapping report” to see if any of the older fittings have residual depreciation benefits.


“Say you bought a property late last year that has a tenant in place. The property was built in 1990 and you remove the kitchen, which originally cost $10,000,” he said.

In 2014, this 24 year-old kitchen would still offer 16 years worth of depreciation benefits.

“You might be able to get $4,000 as an immediate tax deduction for the removal of the kitchen,” he said.

Moreover, the renovation would "re-set the clock", so that landlords can continue to claim depreciation on the cost of the new kitchen over the next 40 years, Mr Hyde explained.

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