A Landlord’s Guide To Depreciation Schedules

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a landlord’s guide to depreciation schedules

Buying a property to rent can be a huge risk. You may not know if a property is worth the investment, and without the right research, you will be venturing into the unknown. There’s a lot you need to know when becoming a landlord to ensure that you meet all of your financial and legal obligations but with the right approach, you can ensure that everything is above board.

There are many ways to ensure your property makes you the maximum income possible. One option not to be overlooked by landlords is creating a depreciation schedule. With a depreciation schedule in place, you will be able to reduce your taxable income at the end of the year and increase your profits. To ensure you get the best possible return at tax time, it’s important to take some time to understand depreciation schedules and why they are important for landlords.

Continue reading to learn about what a depreciation schedule for rental property entails and how it can help you maximise your profits.   

What Is A Depreciation Schedule?  

In simple terms, a depreciation schedule is a table that shows you the depreciation of a property over the span of time that it holds value. It’s a tool for landlords to use to calculate tax deductions for the year and claim money back. Only expenses to do with a property can be depreciable, and not land. Many things can be depreciated in a rental property. As an estate gets older, there is bound to be wear and tear. It’s a given you’re going to want to amend any deterioration, and this will cost you. Your depreciation schedule will allow you to claim back on these expenses and focus on your goal of increasing profits.   

Seek Advice From A Quantity Surveyor

It’s going to be difficult for you to calculate an entire depreciation schedule without the help of an experienced professional. A quantity surveyor can be hired to prepare your entire schedule for you and their costs are fully tax-deductible, meaning you don’t have to worry about paying expensive fees. Simply find a specialist quantity surveyor who is a registered tax agent with the Tax Practitioners Board of Australia. A specialist will know all the ATO rules and regulations to ensure your schedule is in line with the law. It’s their job to put your best interests first and ensure your deductions are maximised.   

Understanding The Process  

To ensure the process is as seamless as possible, it’s important to have an understanding of what is involved. It’s useful to hire a quantity surveyor straight after the settlement, don’t wait right up until the tax date. It could even be beneficial to get pre-purchase estimates, which can help you evaluate a property’s depreciation before you buy it. 

After you hire your surveyor, you’ll need to supply them with all the information about your property. The next crucial step is the site inspection. This is where your specialist will evaluate your estate to see what can be included in the depreciation schedule. It’s then up to the quantity surveyor to gather any extra information needed. In just a few simple steps, your property depreciation schedule will be complete and all you need to do is take it to your accountant, who will finalise your deductions.   

Begin Creating Your Depreciation Schedule Today  

Once you have a good understanding of depreciation schedules, it’s time to to get started. Having a depreciation schedule in place for your property can save you money at the end of the tax year and help you to maximise your profits. With the right help, putting together a depreciation schedule is straightforward and cost-effective, allowing you to generate more money going forward to increase your property portfolio.