Save money by understanding common property entitlements
As property investors it is always good to know what tax deduction options are available. After all, every little bit counts, and the savings you make here and there - no matter how small or large, could very well help you to secure your next house or apartment. Given such, I have decided to share with you the following piece provided by BMT Tax Depreciation, which appears in the June edition of CENTURY 21 Wentworth’s Property Investor
Take full advantage of common property deductions in your investment property
Common property has been identified by the Australian Taxation Office (ATO) as areas within an apartment complex or development that areshared between owners. Common areas are nominated sections of a complex which all owners are entitled to utilise.
How can common property entitlements increase an investor's depreciation benefit?
Unit owners can save thousands of dollars each year by claiming depreciation on common property within the apartment complex or development in which their investment is located.
Common property depreciates in the same way as any other part of the property. Plant & Equipment items (Division 40) in common property will depreciate according to effective lives which are determined by the ATO. Capital Works allowance (Division 43) relates to the structural portion of common property and depreciates over 25 or 40 years, depending on the construction date.
A taxpayer's percentage of ownership for common property is calculated using unit entitlements commonly found on the strata plan. The portion of a common item owned is considered an asset in its own right and is depreciated as such. Claiming a percentage of the depreciation on common property adds to the investor's total depreciation claim.
How is a unit owner's entitlement to common property usually determined?
A unit owner's entitlement to common property correlates directly with their liability. Common property is usually apportioned depending on a number of criteria such as the size of the unit, its position in the development (e.g. penthouse or ground floor unit) and even its view. When a Land Surveyor initially draws up the plan for a development, they calculate each unit's entitlements.
BMT Tax Depreciation performs a thorough site inspection of common property areas and items. Based on relevant building plans, BMT Tax Depreciation determines the owner's entitlements. All common plant and equipment items within the development are valued and then apportioned based on the calculated entitlement. This is a complex procedure which should be handled by a specialist Quantity Surveyor.
We are happy to discuss any queries investors may have about common property depreciation.
Article Provided by BMT Tax Depreciation.
Please contact 1300 728 726 or visit www.bmtqs.com.au for an Australia wide service.