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
Infrastructure assets are well-positioned to hedge against global uncertainty and can enhance the diversification of traditional portfolios with their evergreen characteristics, an investment chief believes.
Volatility in US markets means currency is becoming a critical decision factor in Australian investors’ ETF selection this year.
Clime Investment Management is overhauling the selection process for its APLs, with managing director Michael Baragwanath describing the threat of a product failure affecting clients as “pure nightmare fuel”.
Global X will expand its ETF range of exchange-traded funds next month with a low-cost Australian equity product as it chases ambitions of becoming a top issuer of ETFs in Australia.
