Property investors missing out on millions of dollars of tax relief

The Sunshine Coast, along with a great proportion of Australia, is a land where over 30% of all properties are owned by absentee owners and not as their prime place of residence, ie, by definition investment properties. They are not all the “ pure property player” investor building a long term and substantial portfolio and engaging professionals to advise on capital return and tax implications, many simply have a second property as a long term renter or a renovator and try to keep running costs to the bare minimum

The problem is, thousands of these people are missing out on potential and perhaps substantial “tax breaks”. The responsibility for clarifying and claiming tax concessions are with the investor, not the ATO, and this is a specialized field requiring professional assistance. Long term local real estate identity, Geoff Grover of REMAX Property Associates sees time and again where the “Mum & Dad “ investor or “tradie renovator’ looking to buy for the above reasons simply do not understand the tax implications nor the tax relief available.

It was recently reported by Etax Accountants, The Australian 19 May that “the deduction we find most people miss is depreciation and building write-offs on their rental property” said Scott Griffin, director of Etax Accountants. “There are a whole lot of things people could be claiming on their rental property, but they either just put in a few items of depreciation or even leave it out completely”.

The advice is that everyone who has a rental property - residential, commercial or industrial – simply has to engage a quantity surveyor to make a thorough list of all the things for which they can claim, all the things that they have done to the property or things that were there from prior years.

Bobby le Roux, director of Accord Quantity Surveyors based on the Sunshine Coast, says
“The benefits of having a tax depreciation schedule prepared by a specialist, is very often understated and worst of all completely unknown! “
Accord says owners of income producing properties may be eligible to claim substantial tax deductions on their properties. The current tax legislation permits a building write-off allowance. In addition, owners will be eligible to depreciate the furniture, fittings and plant within their property, as well as their share of the common property. Claiming this Tax Allowance may significantly enhance the after tax return on a property. Both the first and subsequent owners of a property may claim Tax allowances. The owners' accountant may further be entitled to adjust the past 4 years' tax returns in lieu of unclaimed allowances.
As an example of how complex it can become, there is often confusion from investors when it comes to knowing what landscaping in investment properties can be depreciated. The ATO will allow you to claim depreciation on ‘hard’ landscaping such as driveways, pathways, paving, pergolas, gazebos, clothes lines, retaining walls, fencing, rainwater tanks, swimming pools and spas. These items all fall under depreciation.
Pool equipment, rainwater pumps, irrigation controls and motors for gates are all depreciated under ‘Plant’ and therefore depreciated faster. Unfortunately, you are not able to depreciate ‘soft’ landscaping such as plants, soil / fill, turf, mulch, and rocks / pebbles.

Renovations of properties whereby the initial build date is post 1985 where the internals of dwellings may be torn apart can become quite complex. Fittings intended to be removed may retain a residual value that can attract an immediate be tax deduction, so it is important to establish a quantity surveyor authorized value prior to demolishing original fittings. Even with the purchase of a house built prior to 1985, the owner can claim depreciation on the plant and equipment, but not the building.

Given the above situation, it is sensible advice for property investors to have Property Tax Allowances prepared by a professional that will ensure they receive their full Tax Allowance and Depreciation benefit available under the current tax legislation