As the laws currently stand investors are allowed to claim expenses incurred in holding their investment property against their normal income earned. However, a recent study showed that many people are missing out.

According to statistics released by the Australian Taxation Office (ATO), 2.8 million property investors claimed deductions relating to their rental property over the 2012 – 2013 income year.

Among these investors, just over one million received an average capital works deduction of $2,113 while almost two million property investors claimed an average deduction of $1,179 for depreciation of plant and equipment, making the total average deprecation claim made by property investors who claimed both years an average of $3,292.

Comparing with the statistics released for the 2011-2012 income year, there was an increase close to 100,000 in the total number of investors claiming deductions for their rental properties.
Despite this increase in people claiming, there was next to no change in the overall deductions claimed for capital works or plant and equipment assets. The average capital works deduction compared with the previous year increased by $83 and the average plant and equipment deduction increased by $40.

Based on data collected from tens of thousands of quantity surveyor’s depreciation schedules, the average deduction found claim within this time was $9,076 for both plant and equipment and capital works, an increase of $5,784 that investors could be claiming.

It can therefore be reasonably presumed that investors are not calculating or claiming their depreciation deductions correctly. This “missed claim” could easily equate to an extra $50 per week in the average investor’s pocket, if done correctly.

I would advise everyone to check their claims thoroughly and have an expert prepare a QS report to no deductions are missed.