If you are a property investor, there could be a significant cash flow available to you at tax time through the depreciation of outdoor items, according to BMT Tax Depreciation.
Owners of income-producing properties can often claim sizable tax deductions for the natural wear and tear which occurs to a building and its fixtures and fittings over time, known as property depreciation.
“The Australian Taxation Office lists thousands of items that qualify for depreciation deductions, and it can be difficult for investors to ensure they have included every eligible asset in their claim,” BMT Tax Depreciation CEO Bradley Beer said.
“Claiming all available tax deductions at tax time is now more important than ever and property investors should take every opportunity to improve their tax return.”
A common misconception held by many investors is deductions only cover the building or assets contained inside a property.
However, according to Mr Beer, outdoor assets and structures can also attract valuable deductions.
“A garden shed is a depreciable outdoor asset that is sometimes overlooked. If an investor has a garden shed, their typical deduction in the first financial year would be around $600 and $3000 cumulatively over the first five years,” he said.
“The first-year depreciation claim on a pergola would be around $500 and there would be cumulative deductions of around $2500 over the first five years.”
Rainwater tanks are another depreciable asset often unnoticed, and Mr Beer said they could attract an extra first-year deduction of $300 and $1200 in cumulative deductions over the first five years.
There are also extra deductions available for investment properties with pools.
“Not only is a swimming pool itself depreciable, but so are the cleaning assets,” Mr Beer said. “If you put in a swimming pool, pump and filtration system for $46,000, you could expect to claim a combined amount of $2000 in depreciation deductions in the first year and $8000 over five years.”
Outdoor security systems are depreciable, even down to the security code pads and digital peepholes, with an average depreciable value of around $1600 in the first year and $4000 over five years. Even garbage bins and washing lines can be an additional source of saving for investors.
“The depreciable value of these items will usually total $500 and as these smaller ticket items are often valued less than $300 each, they could also entitle their owner to claim the full amount as an immediate write-off in the first financial year,” Mr Beer said.
“The deductions for assets found outside an investment property add up and it pays for an investor to understand how depreciation works and which items can be depreciated.”