Depreciation is the natural wear and tear that occurs to a building and the assets within it over time.

Angus Raine, executive chairman of Raine & Horne said research suggests 80 per cent of landlords fail to claim the maximum depreciation deductions available from their investment property. 

“Potentially these investors are missing out on thousands of dollars each year, even though the costs of a depreciation schedule, which are usually between $650 and $700, are 100 per cent tax deductible,” he said. 

To claim deductions for depreciation, a landlord must submit a depreciation schedule, a report prepared by a quantity surveyor.

The report lists the depreciable assets related to owning an investment property, including the building itself.

Landlords can claim 2.5 per cent of the cost of the building structure annually if construction of the property commenced after September 15, 1987. 

They can also claim between 10 per cent and 20 per cent against the values of a variety of depreciable items including carpets, blinds, hot water systems, air conditioners, cook tops and smoke alarms.

Angie Ritchie, director of Illawarra and Shoalhaven-based real estate agency Zest Residential also suggested owners prepare a property depreciation schedule.

She offered other advice for investors in the lead-up to tax time. 

“One thing would be to arrange for their agent to pay all of their rates and things during the year, so that it’s all collected in the one statement,” she said. “So when you’re going to your accountant at the end of the year you just have everything compiled, because an agent will give you an end of financial year statement that will compile all of that stuff, and it’s just easy to take it to the accountant.”

Ms Ritchie also suggested arranging for those niggling repairs and maintenance to be completed.

“Leaking taps, a leaking toilet, things like that, and organise for them to be done and paid before June 30 so they can claim it on their tax for this year,” she said. 

Belle Property Wollongong and Thirroul director Nicole Kay said at this time of year they encouraged their landlords to participate in a portfolio health check. 

“That involves not only looking at whether or not you’ve got a depreciation schedule, but also making sure that your insurances are all up-to-date, rentals are at the levels they should be at and encouraging them to have sales appraisals done on their properties as well.” 

Raine and Horne’s to-do list for landlords also includes:

•Before June 30, check curtains, blinds, window screens, taps and carpets for wear and tear and see if you need to replace anything.

•Inspect your property, or have your managing agent inspect it, to look for damage or deterioration that you may need to budget to repair in the future. Especially check railings, banisters, balconies and hot water services.