It is impossible or almost so to find somebody who enjoys paying tax. Yet the interesting thing about that fact is that many people do pay too much tax. Hard to believe but surveys time and again point to the fact that people often do not make claims to which they are entitled. And nothing illustrates this point more clearly than with those people involved in receiving an income from an investment property or properties. The taxation rules and regulations are very clear. Well perhaps they are very clear to experts, to the valuers, to quantity surveyors and tax agents, but to your average investor they may not seem to be clear.
So let’s try to explain in simple language just how you, as a property investor, can pay a lower rate of tax. In a word its property depreciation. As someone earning money from the sale or rental of property, you are entitled to claim certain costs in the upkeep or development of your investment property. It’s the same principle for those people who use their car as an essential part of employment or somebody who works from home and therefore uses power and heating within their home as part of their job. The tax office allows such workers to claim some of their costs. When agreed to, this means their taxable income is reduced and therefore the amount of tax they pay is lower.
So there it is in a nutshell. You own a property which is generating an income. You decide to build an extension to that property. You have to replace the bath, the hot water service or the carpets. The expenditure you make on these items can be listed on your depreciation report. Now which items are allowed to be listed and the percentage amount by which each specific item is depreciated varies. An investment property depreciation expert will know exactly what to do.
Ask an expert
So your property portfolio is going nicely. You make sure that you get an expert property valuation before you do anything about increasing your portfolio. You take top professional advice each step of the way. But once your portfolio is up and running, once you are earning an income from your investment properties, how well are you managing your day to day financial affairs? How strong is your cash flow? In short, are you paying too much tax? Is property depreciation being considered?
This is where an expert understanding of your investment property depreciation schedule is worth money in your pocket. And depending on the size of your property portfolio and the amount of legitimate property depreciation claims you are entitled to make, this could be a serious amount of money. The money you may be overpaying in tax could well be used by you to retire debt or even add to your property portfolio.
If you are unsure about your depreciation report rights and claims, contact an expert who knows the situation inside and out. Provide them with a wide range of questions to test their suitability. Investigate their background, their qualifications, experience and testimonials. Once you find the best in the business, make sure their expertise prevents you from ever again paying too much tax.