Do you want to find out more about depreciation tax?

Tax depreciation is a great way to reclaim the expenses of a fixed asset by a deduction in tax. It is mainly assumed that the expenses incurred by the depreciation of a fixed asset can reduce the taxable income a homeowner might have to pay.

What kind of Property can be Depreciated

The following property can be depreciated

  • All the fixed assets a homeowner might have in their homes. These include things like electrical appliances, carpets, curtains and certain household items. However items which last less than a year cannot be depreciated.
  • The second kind of asset depreciation is within the structure of the building where a homeowner might live. This includes wear and tear incurred on the driveway, the stone and the mortar on the walls etc.
  • One thing which needs to be kept in mind is that the land on which the home is built does not come under depreciation. It is assumed that a land is non depreciable because it yields its value over a period of time.
  • A property is considered to be depreciable till the time it’s useful or till the time it stops being useful.
  • Depreciation cannot be recorded on an item which you have purchased but haven’t used as yet.

What Time Does Depreciation end?

  • You cannot claim depreciation on an asset which has stopped being useful or has completed its shelf life.
  • An asset which is sold off can’t be depreciated
  • Once you stop using an asset you can’t claim depreciation for it.

The Advantages of Depreciation Tax

Make sure you aren’t missing out on rental property depreciation.

  • Depreciation is the only tax which is considered non- cash, which is actually a good thing.
  • An asset for which you claim depreciation tax provides home owners with quite a bit of profit. Savvy homeowners save thousands of dollars in a year if they are claiming depreciation tax for their property.
  • Though most people believe that determining a depreciation method can be a big headache it can prove to pretty useful. Employing the right tax surveyor for the job can help save money in the long run.

What Should I do to Calculate Depreciation Tax?

If you own a rental property that is making money, you may be able to claim tax deductions with depreciation tax. Since calculating depreciation is a complex job and is done well by experts only, you can contact a well known quantity surveyor to take a note of your depreciable assets.

However you need to provide them with the following information

  • Keep a complete note of all the depreciable assets in your homes. For example when a fixed asset had been purchased
  • The actual cost of an asset, including installation and shipping costs.

Keeping a complete record can help homeowners determine the exact depreciation to reduce their tax liability.

Hiring a Quantity Surveyor

Keep the following things in mind when hiring a quantity surveyor

  • Make sure that the quantity surveyor is an expert in construction economics.
  • They need to be registered tax agents as well.
  • The surveyor must conduct a proper assessment of your property.
  • They should document all the depreciable items by analyzing and taking pictures.
  • Should be able to determine the value of each depreciable asset
  • They should create a detailed report on all plant and equipment items which are depreciable. The report normally contains the rate at which the assets can be depreciated.
  • Once done the report is handed over to an accountant who would then determine the depreciation tax a homeowner can claim.