Property Tax Depreciation

Many property investors are unaware of the substantial tax benefits associated with owning an income producing property.

Walton Smith Consultants are specialists in the field of property tax depreciation. Under Australian income tax law, owners of property used to produce assessable income are entitled to claim the decline in value for certain building elements and associated articles of plant and equipment.

Whether you own a:

  • Residential investment property,
  • Commercial or industrial building,
  • Block of units or
  • Rural property.

Walton Smith Consultants have the knowledge and experience to help you with your tax depreciation needs in Dubbo, Wellington, Orange, Bathurst, Mudgee, Parkes, Forbes, Wellington, Coonabarabran, Cobar, Narromine, Gilgandra, Blayney, Warren, Coonamble and across Central West & Regional NSW.

We have been employed and are recommended by some of the regions biggest and most experienced Accountants (Boyce & Co, Lawrence Bennett & Portelli, Wright Partners, Crowe Horwath (WHK) - Dubbo, Forbes, Parkes and Wellington).

What is Property Tax Depreciation?

Depreciation refers to an assets decline in value over its anticipated life even if the overall value of the investment increases. As the land value of an investment increases the condition and value of the property decreases.

A property tax depreciation schedule is a report that outlines the decline in value that a property investor is entitled to. Walton Smith Consultant's are committed to providing specialised tax deprecation schedules prepared to the ATO requirements which will improve your investment properties performance.

What Can I Claim?

This is where property tax depreciation becomes tricky. There are certain articles of plant and equipment that can be deducted at an increased rate compared to the building itself. Basically our property tax depreciation schedules are split into two sections:

  • Capital Works Allowance: Capital works are those building elements that are integral to the building structure i.e. walls, floors, roofs etc. Residential investment properties constructed after 19th July 1985 are eligible to claim 2.5% or 4% of the original construction cost depending on the date the property was constructed.

    The ATO stipulates that "an appropriately qualified person" (TR 97/25) must be engaged to calculate original building costs if accurate original costs are unavailable.

    As qualified Quantity Surveyors, Walton Smith Consultants are appropriately qualified as outlined by the ATO to compile property tax depreciation schedules.

    Valuers, Accountants and Real Estate Agents are generally not appropriately qualified.

  • Decline in Value of Plant and Equipment: Articles of plant and equipment can be deducted at an increased rate compared to the capital works allowance. There are many items identified by the ATO which can be categorised as plant and equipment. For example: carpet, curtains, white goods, air-con etc are all considered to be plant and equipment (NB: this list is not exhaustive).

    Walton Smith Consultants have an intimate knowledge of what is and is not considered to be plant and equipment. This is particularly important now that the ATO is cracking down on illegitimate claims.

How Much Does It Cost?

The cost varies depending on the type, age and purpose of the investment property. Our fees are also fully tax deductible.

To obtain an obligation free quote please click here.

Frequently Asked Questions

Why do I need a property tax depreciation schedule?

If you want to save tax and you own an income producing property (rental or business) then you must obtain a property tax depreciation schedule. Schedules prepared by qualified professionals not only ensure that all possible deductions are identified but also that governing laws and requirements are met. This reduces the taxpayers risk of failing an ATO audit.

I own an investment property constructed before 19th July 1985, is it still worth have a property tax depreciation schedule compiled?

Yes. In our experience, few investment properties will not return significant tax deductions for the decline in value of plant and equipment. If you have are unsure of the benefits of obtaining a tax depreciation schedule for your older investment property, contact Walton Smith Consultants and we will provide a free assessment of your property.

Can I use a square metre cost rate to calculate my original construction cost for the capital works allowance?

No. Square metre rates are not accepted by the ATO as they are not sufficiently specific to the particular building being valued. This is the practice of some Sydney tax depreciation "specialists" and it is not the accepted or most accurate practice.

Can I claim deductions for an extension the previous owners built?

Yes. Anything in the property which appears to be a recent addition can be deducted as long as we can verify the date at which the improvement, extension or renovation was made. It does not matter if you do not have the original construction costs, we can prepare an estimate for the cost of any structural improvement.

Do I need to have a schedule compiled each financial year?

No. Our schedules are prepared to account for the next 10 years worth of deductions.

I have recently replaced the kitchen in my investment property. Can I classify this as repairs / maintenance and claim an immediate deduction?

No. The ATO would class this type of renovation as a structural improvement and would need to be deducted at a rate of 2.5% as per the capital works requirements.

What does the property tax depreciation report include?
  • A thorough inspection of the property by a qualified Quantity Surveyor
  • Two copies of the report, one for your records and one for your accountant.
  • Both Prime Cost & Diminishing Value Methods
  • Breakdown of plant & articles (items which have a higher depreciation rate)
  • Annual depreciation totals
  • Retrospective claims for clients that have not been claiming deduction over previous years (you can only backdate a claim 2 years plus the current year)
  • Schedules cover the next 10 financial years
Where does Walton Smith Consultants offer its Property Tax Depreciation Service?

We offer the Property Tax Depreciation Schedule Service across Central West & Regional NSW.

  • Dubbo
  • Nyngan
  • Narromine
  • Molong
  • Orange
  • Bathurst
  • Oberon
  • Mudgee
  • Lithgow
  • Parkes
  • Forbes
  • Cobar
  • Wellington
  • Warren
  • Gilgandra
  • Blaney
  • Coonamble
  • Coonabarabran

and pretty much anywhere in-between within about 300 km of Dubbo, NSW.

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