Property investors failing to claim $17.5b in tax entitlements
Australian property investors are missing out on an opportunity to cut their taxable income by failing to correctly assess their property's annual depreciation.
Mark Kilroy, director of tax depreciation, at quantity surveying firm, Koste, said investors were mission out on an average of $5000 per property in depreciation entitlement each year.
Kilroy said investors were undervaluing their entitlements and had left the Australian Taxation Office (ATO) with $17.5 billion in unclaimed entitlements in the last tax year.
"Only 40 per cent of investor are taking advantage of property tax depreciation schedules with aver annual claims of just over $3000," Kilroy said.
"This is thousands lower than the average annual claims of $8000. Investors are simply unaware of the benefits and the thousands of dollars they could be claiming in entitlements.
"They're missing the opportunity to reduce their taxable income, as they may be self-assessing claims or undervaluing entitlements."
Kilroy said quantity surveyors who prepare tax depreciation schedules could help investors claim deductions correctly.
"I always recommend using a qualified quantity surveyor to carry out the site survey and compile the report — this enables them to provide the client with detailed and accurate schedules which in turn maximises the claimable amount," he said.
"If your property is eligible for deductions and you've never claimed depreciation, you could be entitled to a substantial back claim.
"For example, one of my clients who'd never claimed depreciation on a newly built $450,000 property claimed upward of $14,000 in the first year and an average of $9500 every year thereafter."
AUTHOR
Nicholas O'Donoghue
Recommended for you
BlackRock Australia plans to launch a Bitcoin ETF later this month, wrapping the firm’s US-listed version which is US$85 billion in size.
Financial advisers have expressed concern about the impact including private market exposure is having on their tracking error budget, according to MSCI.
State Street will restrict its membership of global climate alliance Net Zero Asset Managers after the organisation dropped its flagship 2050 goals amid ESG backlash from the US.
Betashares has launched a global shares and a global infrastructure ETF as part of the firm’s strategic expansion strategy to support financial advisers in building more diversified portfolios.
