Investors are eligible to claim pro-rata depreciation deductions for the period their property is rented out or genuinely available for rent. This means, if a property has only been owned and rented for a short period of time or has been used as a holiday home for both private and income-producing purposes, the owner can still benefit from claiming depreciation deductions.

Quantity surveyors like BMT Tax Depreciation use legislative tools such as applying the immediate write-off rule and adding eligible assets to a low-value pool to make partial year claims more beneficial to new investment property owners.

An immediate write-off applies to any item within an investment property with a value of less than $300, regardless of how long the property has been owned and rented. As an investor, you’re entitled to write-off the full amount of the asset in the first year.

Low-value pooling

Low-value pooling is a method of depreciating plant and equipment assets which have a value of less than $1,000. Any plant and equipment assets with a value of less than $1,000 can be included in a low-value pool and written off at an accelerated rate to maximise deductions.

Eligible items can be depreciated at 18.75 per cent in the first year and 37.5 per cent each year thereafter.

Low-cost and low-value assets

Two types of depreciable assets can be allocated to a low-value pool. These are low-cost and low-value assets. A low-cost asset has an opening value of less than $1,000 in the year of acquisition.

Read more about tax depreciation on the BMT Tax Depreciation website.

Whereas a low-value asset refers to an item which has an opening value of $1,000 or greater in the year of acquisition, but the value after depreciating over time falls below the $1,000 threshold. This will only apply if you’ve previously used the diminishing value method.

Similar assets are also often grouped such as curtains or blinds. Therefore, these items may not be eligible to be added individually to a low-cost or low-value pool.

To ensure all depreciation deductions are claimed correctly for the period a property is income producing or available for rent, investors should request a tax depreciation schedule.

A BMT Tax Depreciation Schedule will outline all qualifying deductions from the date of settlement and include a partial year depreciation claim that is calculated pro-rata based on the time the property is rented.

For more information, Request a Quote or speak to the team at BMT Tax Depreciation.

This is a sponsored article.

Visit the BMT Tax Depreciation website here.

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