Property investors often purchase holiday homes with more than one motivation.
They hope not only to gain an income from the higher weekly rental yields that a holiday home may offer, but also picture taking advantage of their investment by spending some of their holiday’s swimming in the backyard pool or taking in the ocean views from an apartment balcony.
Before making a decision to dive in and purchase any investment property, investors should seek advice from relevant professionals such as a Property Manager, an Accountant, a Financial Advisor and a Quantity Surveyor.
Research shows that 80 per cent of investors are not maximising the deductions they can claim from their investment property.
Holiday rental property owners often assume that because they are personally using their property, depreciation cannot be claimed.
This can lead to investors missing out on thousands of dollars in lost deductions annually.
The Australian Taxation Office allows investors to claim deductions for the wear and tear of the structure of the building and the plant and equipment assets contained in any income producing property, including holiday rentals.
Investors are encouraged to seek advice from a specialist Quantity Surveyor when purchasing a holiday home.
A Quantity Surveyor can provide an estimate of the deductions that will become available to assist with any purchase decisions and a full tax depreciation schedule on settlement that outlines all of the depreciation deductions the owner can claim for the life of the property (forty years) for the owners Accountant.
It’s extremely important in the case of holiday homes that investors arrange a depreciation schedule as often the owner will only plan to rent the property for part of the year.
A specialist Quantity Surveyor can provide a tax depreciation schedule which is based on the portion of a year a property is available for rent.
The owner of the property can still claim depreciation for any periods of time it is untenanted so long as it is available for rent.
However, depreciation cannot be claimed during the portion of the year the property is used for personal use.