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Maximise your (late) depreciation schedule by amending prior 2 years (and maybe more) tax returns

Many real estate investors are “accidental” investors that haven’t received a full property investment education.

Many tax accountants don’t strongly recommend depreciation schedules enough.

Even depreciation schedule providers don’t recommend them strongly enough.

I have a client that was denied by 2 separate providers that a schedule would be worthwhile.

I then called my guy and said this is ridulous – and he agreed – there was a bathroom reno that he esimated at at least $16k depreciation left.

So $800 a year for 20 years – and 2 other providers missed it.

Only because I know the game and have an experienced depreciation schedule provider who I speak to regularly was I able to get this objective for the client.


(* note a week later we looked together at another client’s property in Tas that has had nothing done to it – the client who is a savvy investor always claimed there was no depreciation possibilities – but I wanted to make 100% sure – but my depreciation guy agreed…. so just because you have a property doesn’t mean that it will have depreciation).

BUT – if you are buying a property now, the chances are pretty slim that since September 1985 when the rules came into play -that nobody has done something to the kitchen, bathroom, flooring or something else that is linked to the building that could be claimed as a building deduction and deducted at 2.5% over 40 years.

And the capital works (2.5% over 40 years) – didn’t get reversed in May 2017 unlike the capital allowances.


The Capital Allowances (dishwasher, carpet, blinds), anything that could be taken away from the property – are usually deducted on a diminishing value method by property investors (also called the reducing value method in uni) – so the date you start the schedule will affect the future years.


However for capital works – it is 2.5% per year (apportioned by days) – so the earlier the schedule starts (i.e. the period that the property is available for rent i.e. you sign a rental agent agreement or the like ) – then the earlier you’ll start to be able to claim that 2.5% tax deduction.


So a service we offer property investors is to amend the previous 2 year returns to make sure that they are receiving the tax back that they can get.

For some investors we may consider whether we try to “fight” the tax office to try to object to the 2 years and receive either 4 years (most likely) or perhaps a longer period.


When you consider that most taxpayers are at least in the 32.5% tax brack (meaning often 32.5% plus 2% medicare levy plus 1.5% low income shade out = 36%) – then you get more than 1/3rd of your depreciation amounts back in tax – and taxpayers that are on the 37% bracket (39% when you include the 2% medicare levy), or 45% (47% incl 2% medicare levy) – the tax refund is even more substantial.


Depreciation schedule over 2 years – amend 2 years then object 2-4 years – Watch Video

About Scott Kay

Integrity Plus Accounting

Scott Kay is currently a husband and father of one young daughter. He founded Integrity Plus Accounting over 4 years ago and has had his own clients for over 10 years. He has worked for 3 other accounting businesses and loves to help clients grow – in their business, their wealth, their mindset and their lives.