Another financial year has come and gone. Some are commendably organised and have already filed their tax return whilst others wait to the very last moment.
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If you are a property investor who has put off doing your tax return, you will want to read this first.
According to the Australian Taxation Office, there are three types of rental expenses. Expenses you can't claim, such as costs your tenant paid and deductions unrelated to your investment property.
However, there are expenses you can claim in the same income year, such as interest on loans. Then there are expenses you can claim over several years, such as depreciation.
It is the third area, which can often be overlooked. According to new analysis by MCG Quantity Surveyors, Australian property investors are missing out on claiming billions in deductions by failing to take one simple action.
MCG Quantity Surveyors analysed 1000 investors across its database to discover how many had delayed ordering a tax depreciation schedule on their property holdings - and how much it had cost them.
Mike Mortlock, managing director of MCG, was shocked to discover of the investors in their study that missed claims, the average lost deduction due to inaction was over $20,000.
"It's an extraordinary outcome," Mr Mortlock said.
"If you extrapolate our findings across the nation's total investor population, Aussie landlords are potentially short $2.886 billion on their claimable losses."
MCG's figures revealed the average number of lost years of deductions for investors who missed out because they didn't have a schedule was 3.58 years.
In that time, the average investor without a schedule had potentially forgone around $20,537 in depreciable benefits.
"We even had one investor who waited almost 18 years to do a schedule and lost $41,000 in tax breaks as a result."
The MCG analysis showed 6.7 per cent of all investors in their study had lost deductions in this manner.
"When these results are replicated across the nation's total investor population, there are potentially 140,525 Aussies who're missing out on deductions.
"Given the average unclaimed amount was $20,537, this equates to a total potential loss of $2,885,967,347 in missed depreciation write-offs."
Mr Mortlock said a lack of awareness about the benefits of depreciation had a huge part to play.
"The longer you put off ordering a depreciation schedule on your property, the more you lose in benefits because you can only back-claim two years of depreciable items under normal circumstances."
Mr Mortlock said for the sake of a few hundred dollars, real estate investors could be reaping thousands in tax-return benefits.
