If you have purchased a property in Australia for the purposes of investment, you may be able to use this investment as a way to reduce your annual tax bill. Read on to find out more about how this process works and how it could save you money.
Property Investment and Tax
If the property has lost value, the Australian tax code allows property investors to offset a certain amount of tax. The exact amount which can be deducted will depend upon a number of factors such as
- The value of the property
- The age of the property
- The rate of depreciation
As with a lot of tax-related matters, performing this calculation is complicated. You should never attempt to work out the amount of any possible tax deduction on your own. If you do so, you are likely to make an error which could result in the tax authorities investigating you for underpayment of tax. If you are found to have underpaid on the amount of tax owed, you could be subject to various financial penalties. You should always call in an expert.
In order to work out if you can claim any tax deductions, you will need to hire a quantity surveyor. A quantity surveyor is a professional who is trained estimate the cost of construction work and the value of any buildings. You should request that the quantity surveyor conducts a depreciation schedule. The quantity surveyor will visit the property to carry out a full inspection of every area.
The quantity surveyor will take photographs of any damage or repair work which needs to be carried out which may have a negative impact on the value of the property. They will also consider the condition of items within the property such as windows, appliances and flooring. The condition of these items will also have a weighting on the value of the property. Finally, they will consider the property in terms of the local market, searching for similar properties which are for sale so they can calculate an average market price. All of this information will be combined to produce a final figure for the estimated depreciation in value. This report can then be submitted with your tax return as evidence of the reduced amount of tax you owe.
If you would like to find out more, you should contact a tax service which specialises in property investment.