If you are planning on investing in real estate or have already made your purchase, you should understand the importance of property tax depreciation. This is an ideal element for improving the profitability of your undertaking because it allows one to claim tax deductions against your depreciating property. If you understand the provisions made, you can limit your tax burden significantly. Here are some basic tips to help you take advantage of tax depreciation.
Understand the Value
You should know the real value of your assets if you would like to make the most through depreciation deductions. Under ideal circumstances, it is advisable to consult a qualified quantity surveyor when assessing the value of your investment property. This will protect you from the detriment of making assumptions based on the purchase price of the real estate. For instance, if you are planning on purchasing a building, the surveyor should complete a detailed asset inventory. This will allow you to make claims based on the original building costs. Consequently, the depreciation deduction in relation to the current purchase price will be higher.
Prepare the Schedule
Once your property and the assets are valued and reviewed, it is important to have a property tax depreciation schedule prepared. This is designed for adjusting tax returns to recover deductions which might have been missed. In the schedule, the assets are outlined along with the depreciation amounts to which they are subject. It is advisable for you to engage a professional company when handling the depreciation schedule because the process can be challenging and does not allow for errors.
When choosing a professional service, you should ensure that they are compliant with the latest taxation rules and regulations. This will ensure that they are conversant with the best approaches for reducing your property tax without violations. It might also be worthwhile to look for a firm that works with good quantity surveyors for timely assessment when preparing the schedule. In addition, they should offer other tax management services and provide a full audit trail.
Plan for Refurbishment
Renovations and refurbishments are often indispensable for a property. These can cause a significant change in the valuations outlined during the initial inspection. Therefore, if you would like to maximise your total tax deductions, you must ensure that your schedules are updated for all your assets. Under ideal circumstances, you should choose a quantity surveyor for assistance before commissioning major improvements. They will provide an accurate account of costs and depreciation information when the work is completed for your records.