We know that claiming depreciation deductions is one of the best ways to get the best return from your investment property. Despite this, BMT Tax Depreciation sees investors failing to claim lucrative partial year deductions each financial year.
Partial year depreciation deductions can boost cash by thousands in just a few months. So why are investors missing out?
What are partial year depreciation deductions?
Partial year depreciation deductions are those that can be claimed when the property is only available for rent for part of a financial year.
There are a number of reasons for this to be the case. Some of the most common include the owner purchasing the property during the financial year, the property being a holiday rental, or the owner leaving the property empty while they are completing renovations.
Do investors claim partial year?
Unfortunately, many investors don’t know that they can claim partial year deductions. This is largely due to depreciation only being claimed on a yearly basis. This can lead to some assuming that they must also wait a full year before claiming it.
Depreciation is a natural process that occurs over time. As time is anything from several years to only a few months, there is no minimum time frame for depreciation to be claimed.
Are partial year depreciation deductions beneficial?
Partial year depreciation deductions can be in the thousands of dollars, even if the investor only leased the property for a few months of the year.
A major factor that plays into this is the depreciation incentives available. The immediate deduction means any eligible asset valued at $300 or less can be instantly deducted in the year of purchase. While the low-value pool depreciates assets that cost or are valued at less than $1,000 at an accelerated rate.
Combining these incentives with the general depreciation rules for capital works and plant and equipment supercharges partial year deductions. The easiest and best way to do this is to order a tax depreciation schedule following the settlement of the property.
The proof is in the numbers
BMT Tax Depreciation recently prepared a schedule for a brand-new 3-bedroom house valued at $700,000. The investor-owned and leased the property for 6 months in the first financial year of ownership.
The owner of this property used their BMT Tax Depreciation Schedule to claim a partial year deduction of just over $7,000. Making a significant difference in their cash flow in the first year of ownership.
It’s important to remember that second-hand properties can also benefit from partial year deductions. BMT completed a schedule on a second-hand unit valued at $550,000 last financial year. The owner leased this property for 9 months of the financial year and claimed a partial year deduction of $4,800.
Claim partial year deductions with the specialist
BMT Tax Depreciation has helped thousands of investors to claim a partial year depreciation deduction. Their specialist team knows what to look for to maximise investor’s claims while maintaining full compliance.
To learn more about how you can claim partial year deductions, contact BMT’s team on 1300 728 726 or Request a Quote.