ATO cracks down as 90% of rental income tax statements are wrong
With the Australian Taxation Office (ATO) reiterating its focus on rental property income and tax deductions this tax ti...
The chairman of one of Australia’s largest real estate groups has urged investors to have a current depreciation schedule in place by the end of the financial year to avoid missing out on thousands of dollars in unclaimed tax.
Raine & Horne executive chairman Angus Raine said almost 80 per cent of landlords fail to maximise depreciation claims against their investment properties, resulting in thousands of dollars remaining unclaimed at tax time.
“The problem is that many landlords either aren’t aware of the benefits associated with depreciation or don’t have an up-to-date depreciation schedule,” he said.
“Each year, landlords can claim between 10 per cent and 40 per cent off a variety of depreciable items, and sometimes more.
“In many cases, 2.5 per cent of the building cost of the investment home is also claimable on an annual basis.”
To minimise the risk of unclaimed returns, Mr Raine said investors should seek professional support when creating or updating a depreciation report, particularly for an established property where missed claims can be back-dated by two years.
BMT Tax Depreciation Quantity Surveyors CEO Brad Beer said the potential depreciation claims for new homes make them an extremely attractive option for investors.
“As a rule, the newer the property, the more an investor can claim, making purchasing a near-new house or apartment potentially more worthwhile, in a taxation sense, than an established home, at least for the first five or so years of ownership,” he said.
“A brand new residential home valued at $500,000 could potentially provide a landlord with cumulative depreciation claims of $40,000 over a five-year period.
“That said, every depreciation assessment is different and the benefits are calculated on a case-by-case basis.”