Some Questions You Might Have About Property Depreciation in Australia

Property depreciation means considering how a property may have lost value over time, so that your property taxes for it are lower than when you first purchased the property or for when it was first built. This depreciation schedule can save you quite a bit of money on your property taxes and other taxes you need to pay for a rental or commercial property. If you own a rental or commercial property, note a few questions you might have about this depreciation schedule so you know how to include it in your tax returns.

Can a renovated property still be depreciated?

A renovated, upgraded, remodeled, or otherwise improved property may still be depreciated, depending on the cost of renovations and the new property value. Don't assume that making improvements itself means that a building cannot be depreciated, as those changes may not have made the building increase so much in value that the depreciation would not apply.

Who can tell me the amount of depreciation?

Your accountant may handle your tax paperwork, but a quantity surveyor is the person to tell you the actual amount of depreciation you can take. A quantity surveyor is someone who understands the financial aspect of construction, including being able to value a property. An accountant may know how to apply the depreciation or value of a building to your tax returns according to certain tax codes, but they are not qualified to actually determine the value of a property, including its depreciation. Your quantity surveyor will need to know the amount you've spent on renovations, if any, and will also usually inspect the property completely in order to arrive at the right value that you can then bring to your accountant.

What if a person neglected to depreciate their property on their old tax returns?

You can typically amend your tax returns for a certain number of years, if you've neglected to include the depreciation schedule during those years. An accountant can tell you how many years would apply to your building and, if you work with a quantity surveyor, can also tell you how amending your tax returns would affect you financially. You may decide that getting a few dollars back isn't worth the work for amending your returns, but on the other hand, that depreciation may mean getting quite a bit of money back from overpaid taxes. This is why it's good to discuss this option with your accountant if you forgot to include property depreciation on your taxes.