Reduce your tax

Property tax allowances refer to provisions within the Income Tax Assessment Act 1997 (ITAA 1997) that allows owners of income producing properties to reduce their taxable income. These allowances are often referred to as tax depreciation.

Types of allowances

Provisions within the Income Tax Assessment Act allows owners of income producing properties to reduce their taxable income using capital allowance and capital work allowances.

• Capital Allowances are Division 40 depreciating assets which are available to owners of both new and second-hand properties as their value is based on the taxpayers cost to acquire them. The Australian Tax Office provides a guide as to what it considers to be a depreciable asset and 5% to 20% of the property's value is often claimable for items such as carpets, air conditioning and kitchen appliances depending on the property and purchase details. Allowances may also be available for asbestos removal, environmental protection and other specific expenditure.
• Capital works are known as Division 43 or building allowances which provide tax payers with the opportunity to write off certain construction expenditure on the eligible portion of the building.
• The rate of write-off is either 2.5% or 4% p.a. depending on the construction commencement date and building use as detailed below.

	Division 43 Depreciation Rates
Date	Traveler Accomm.	Manufacturing	Non Residential	Residential	Structual Improvements
21 Jul 79 - 19 Jul 82	2.5%
20 Jul 82 - 20 Aug 84	2.5%	2.5%	2.5%
21 Jul 84 - 17 Jul 85	4.0%	4.0%	4.0%
18 Jul 85 - 15 Sep 87	4.0%	4.0%	4.0%	4.0%
16 Sep 87 - 26 Feb 92	2.5%	2.5%	2.5%	2.5%
27 Feb 92 - Today	4.0%	4.0%	2.5%	2.5%	2.5%

Claim every allowance

QS Solutions can assist in claiming every possible property tax allowances by:

• Effectively structuring purchase and sales contracts
• Estimating tax allowances for feasibility studies and marketing
• Preparing accurate depreciation reports at purchase and construction completion
• Claiming write-off allowances of all demolished work
• Updating depreciation allowances following renovations, extensions, repairs and refurbishment work
• Preparing detailed asset break-ups for self property tax management
• Reassessing effective lives

Results guaranteed

We guarantee a professional and affordable report that will benefit our clients.

• Get more depreciation within the first full year than our fee or the report is free
• Fees are payable after you receive the report
• Fees are tax deductible

Report content

Each QS Solutions depreciation report is prepared to substantiate the eligible allowances to the Australian Tax Office and include:

• A list of eligible Division 40 & Division 43 allowances assets within your property
• Low value and low cost pools
• Common area allowances if part of an eligible strata
• Both the prime cost and diminishing value methods of depreciation
• Depreciation rate, dollar value, first year claim and closing value for each asset
• Annual allowances using each depreciation method for tax planning purposes

Quality consultants & procedures

The Australian Tax Office requires that tax allowance reports be prepared by appropriately qualified professionals with adequate skills to accurately claim eligible allowances. All QS Solutions reports are prepared by a direct employee who:

• Is a registered tax agent with a minimum of twenty years experience in preparing all types of property tax depreciation reports
• Is directly involved from the initial inquiry through to the presentation of the final report
• Is a qualified construction cost expert
• Is a practising real estate valuer and plant and machinery valuer
• Thoroughly inspects your property and compiles a comprehensive list of eligible allowances specific to your property
• Reviews all available data to ensures an accurate report which claims all available allowances
• Customise each report to reflect the unique characteristics of each property
• Ensures your report complies with relevant legislation, case law and Tax office rulings
• Provide technical support and a photographic archive to assist in Tax Office queries
• Co-ordinate with your accountant and tax adviser as required
• Continuously monitor and research property tax allowance legislation and cases

Get the report ASAP

Preparing a property tax schedule as soon as you obtain the property allows the building consultant to easily identify and substantiate all the eligible items. Preparing a report at a later date requires the consultant to identify the purchased items following possible alterations which may result in eligible items being impossible to substantiate.

Project library

Available allowances depend on the buildings cost, it's age, type, use and plant content. The following is provided as a guide only:

Property	Purchase Price	Building Age (Years)	Tax Allowance
			Year 1 Part Year	Year 2 Full Year	Total
Warehouse	$8,000,000	17	$130,000	$110,000	$1,220,000
Office Building	$24,000,000	25	$750,000	$721,000	$7,000,000
Shopping Centre	$17,000,000	30	$330,000	$380,000	$4,480,000
Apartment	$915,000	40	$18,000	$24,000	$379,000
Project Home	$380,500	New	$2,500	$5,500	$132,000

FAQ

• You only get the report done once and give it to your accountant. There is nothing further for you to do.
• If your property changes due to refurbishments, extensions, or demolition you should update the report to maximise eligible allowances.
• The cost of having a property depreciation schedule prepared is completely tax deductible.
• If you haven’t been claiming depreciation you can back date your eligible allowances.
• Strata depreciation reports should include your eligible proportion of the common property.
• QS Solutions provide continuing professional services for clients and will defend all items included in their schedules if audited by the ATO.
• Sample estimates, construction costs or old depreciation reports are generally not acceptable to use in a tax return. Any schedule used in a tax return must be prepared specifically for your property in accordance with legislation at acquisition.
• The ATO considers that accountants, solicitors, real estate agents and valuers are not appropriately qualified to prepare depreciation report.
• Buildings of all ages contain eligible property tax allowances. This includes second hand properties built before 1985. Qualified consultants can identify and value the relevant items and adopt an appropriate depreciation rates based on their age, use and the laws in force at the relevant time.
• Still have a question. Contact us for an obligation free and straight forward answer.

Fee

Our tax deductible fees are based on the building and the depth of analysis required. QS Solutions can to provide an obligation free depreciation estimate and firm price fee proposal for your specific property. Simply contact us and provide as much of the following information as is readily available.

Property details	Location, use, size and age
Purchase price	As detailed in contract
Purchase date	Trigger depreciation rates
Items purchased	Items purchased with the building incl. carpets, light fittings & furniture
Building plans	Significantly assist in the valuation
Historical construction cost	From developer or vendor if available
Construction date	Triggers division 43 allowancesHistorical construction cost
Any known refurbishments	Alters eligible allowances