The topic of Tax Depreciation is important, however it is definitely not easy to understand, especially if the word itself doesn’t ring a bell to you. In fact, even those who are highly supposed to know about Tax Depreciation still do not know or still get confused with what it is and what it does.
Tax depreciation is the devaluation that can be recorded as a cost on a tax return for a given announcing period under the relevant tax laws. It is utilized so that the sum of assessable pay or taxable income paid by an investor or a business will be diminished. Depreciation is an income tax deduction that permits a taxpayer to redeem the outlay of the assets or properties he/she has purchased and used for profit.
A lot of investors are not able to claim their depreciation benefits or are having problems with doing so because there are pieces of information they’ve gotten unclear, inaccurate and/or wrong. You could possibly be one of them too. If you didn’t know, then here are 3 false things you have believed about depreciation.
“YOU CAN ONLY DEPRECIATE NEW PROPERTIES.”
Because of the time restrictions or age limitations that the law about Tax Depreciation states, you think that only new properties are allowed to be claimed depreciation benefits for. The word “only” makes a huge difference to the truth.
Because they own old properties, numerous investors just let their tax depreciation benefits pass them by. You could’ve been there too. You were told, thus, you have believed that only those properties built a little while back or at a specified time are entitled to claim tax subtractions.
Indeed, the chance of claiming more is higher when you have new properties, but that does not imply that you can no longer benefit from the old ones. Regardless if they’re new or old, all properties are qualified to claim their merit for you as a taxpayer.
“YOUR ACCOUNTANT CAN CREATE YOUR DEPRECIATION SCHEDULE.”
A tax depreciation is important and highly required for you to be able to claim tax depreciation benefits. It is a detailed report of your properties and assets together with their quantity and values. This is made after a site investigation. This will primarily help in calculating and verifying the different rates at which each asset depreciates. Values will be assigned to each one as well.
You cannot just let your accountant create your tax depreciation schedule because there’s only one kind of person who can do so — a quantity surveyor. A dependable and certified expert to aid you is what you need. The matter of depreciation is complex, and you need someone who can lessen your loads about it.
Quantity Surveyors are the only people suitable and allowed to work on your Tax Depreciation necessities. Before one becomes a quantity surveyor, one has to undergo acknowledged legal training. The have the right qualifications, educational background, degree and also experience to do what they do.
More than you and your accountants know, a quantity surveyor is exactly what you need to come up with a tax depreciation schedule, inevitable as you apply for benefit claims.
“YOU CAN’T CLAIM SINCE RENOVATIONS WERE FROM THE PREVIOUS OWNER.”
You think that because someone else owned the property or asset before you have had it, you do not have the right to benefit from it. You do because that actually is not a big deal.
It does not carry a weight if the modifications were started and handled by a former owner. Buying the investment property means you have also gained power over the privilege to claim depreciation boons on all of the property’s enhancements. Renovations are precious gems if your depreciation entitlements are always put to good use.
Any investor can definitely gain advantages from tax depreciation, most especially since that’s the main purpose of tax depreciation — lessening tough things for taxpayers! Tax Depreciation is about determining the value of your investment property when depreciation happens over time and also about claiming your benefits as a citizen who duly pays taxes.
You have to profit from this, so you have to be well-informed about the truths and the rumors regarding tax depreciation. Lack of knowledge and clear understanding about this can make you lose the good things you can get from the depreciating values of your assets and properties.
Nicole Ann Pore writes pieces that cater to people’s need for information regarding business, taxes, investment and financial planning. For many people, there are unknown and unclear things regarding those subjects, so she aims to give light to those that are often not talked about as well. Nicole is a daytime writer for Depreciator, an Australian-based company specializing in Tax Depreciation Schedules.