‘Scrapping’ provides extra deductions for renovators

Having dual depreciation reports drawn up before and after a renovation job can help investors claim thousands of extra dollars in deductions, according to BMT Tax Depreciation quantity surveyors.

The first report is conducted prior to any renovation or refurbishment, identifying the value of all plant and equipment and qualifying capital expenditure contained within the property, BMT’s newsletter notes.

A second report is then prepared after the renovation is completed.

“The assets within the building that are no longer present can be written off immediately,” BMT says, though it warns that this process, known as ‘scrapping’, is complicated and requires the expertise of a specialist quantity surveyor.

BMT provides a case study of the renovation of a 60-year-old townhouse, which allowed for $6270 worth of deductions in the pre-renovation ‘scrapping’ report and a further claim of about $10,000 after the renovation, making for $16,000 worth of depreciation in the first year alone.