Top Tips to Common Property Depreciation
One of the plethora of lessons we learnt in 2020, was that rental prices were very much dictated by social, economic and political factors that we faced in a year of uncertainty. Having said that, there is one financial element of investment properties that remains the same; it’s the tax deductions that they provide to their owners. What property investors don’t always realise, is that there are other ways that they can save! Welcome to Common Property Depreciation!
So what IS Common Property Depreciation?
Does your investment property incur ‘Body Corporate fees’? If the answer is yes, you own a property that’s part of a strata title or ‘Common Property’. These Body Corporate fees cover an array of costs that directly relate to your property, and that of the larger collective, for example; maintenance, the upkeep of shared facilities and safety features (security cameras, well maintained locks and sometimes even staffed hours of operation).
As you pay these fees on a monthly or quarterly basis, it is important to take note of ‘common property depreciation’. These deductions are calculated proportionately, based on the percentage you own of the strata title. For example, if your ownership is five per cent and the security system holds a depreciable value of $20,000, your depreciation deductions would be based off a $1,000 depreciation value equaling your share.
It is important to bring in the professionals when calculating common property depreciation. Specialist Quantity Surveyors and Tax Accountants will need to work hand-in-hand to assist you with your depreciation each financial year.
If you have any further questions or need clarification on how Property Depreciation works, then get in touch with one of our Stockdale & Leggo Offices today, and stay informed.