It is a common misconception that older residential properties, particularly those built before 1985, are not eligible for tax depreciation. However, this is not entirely true as the fact is, there are still many other items or works that can be claimable.
Before we delve into that, let’s have a first look at how The Australian Taxation Office (ATO) sets its rulings. We know that ATO has prescribed forth set dates of construction commencement from which a residential investor would be eligible to claim capital works deductions.
From the table above, we would generally believe that residential properties built prior to 1985 would be too old to qualify for claiming tax depreciation.
Let’s demystify this belief with a step-by-step process.
First, depending on the period of construction commencement, a residential property might depreciate its capital works over 25 years or 40 years.
So, let’s say a 1985-built house would be 38 years old now and would have nothing left to claim. This is the same for any house built before 1985.
It would seem logical and correct in theory. However, how does an antique house withstand the test of time, and is there truly nothing left behind to claim from?
A ‘vintage’ house built back then would have gone through regular maintenance and upkeep to prolong its longevity to last longer.
Any plant & equipment might have already been replaced or updated over time since they rarely last as long as the building.
In general, houses built from decades ago would need to be remodelled and renovated from time to time and receive updates or upgrades to help improve the house’s longevity.
Therefore, this implies that investors like yourself can still benefit from purchasing an old property so long as it has been previously renovated or updated to a certain level.
Now, the important question in your mind right now is how do we uncover what has been done on the property and when was it completed?
The ATO sets the ruling on who is qualified to tell whether any new elements or improvements have been made to a property.
Under the current Taxation Ruling 97/25, when an actual construction expenditure is not available, the use of an estimate from an appropriately qualified person is acceptable by ATO.
A Quantity Surveyor who has expertise in the relevant type of construction is one of the professionals on the list of the appropriately qualified person prescribed by ATO.
This is particularly applicable to situations where the actual cost of the building additions or extensions done by previous owners could not be established or substantiated.
At eDepreciation, your property will be assessed by our experienced Quantity Surveyor who is highly trained and certified in this field. Our professional team can help you maximise the amount of deductions that you are eligible for. As such, you can have peace of mind, as we are also bound by our professional code of conduct to do the right thing by you.
Get in contact with our team now by phone 1300 733 806 or send us an email [email protected] to get a preliminary assessment of your aged property and we will determine if it is worthwhile for you to proceed with obtaining a tax depreciation schedule for claiming your entitled capital deductions.
