Start by separating the categories
Rental-property expenditure can fall into different categories, including depreciating assets and capital works. The ATO also places limits on deductions for the decline in value of certain second-hand assets in residential rental properties, with exceptions. A purchased property’s existing appliances should not simply be assumed to qualify.
Give the preparer a complete history
Collect the acquisition documents and details of work carried out by you or previous owners where available. Identify when the property became available for rent and any private-use periods. Tell the accountant and schedule preparer what is known and what is estimated.
Do not fill gaps by guessing a construction date or treating every installed item as new. Ask what evidence or professional estimate is appropriate where original information is missing.
Keep an additions and disposals list
When something changes, record it. A simple register can include the item, date acquired or installed, invoice, cost, use and date removed or replaced. Attach the relevant supporting document so the next year’s assessment starts with the same facts.
For a replaced appliance, retain information about both the new item and what happened to the old one. Let the accountant determine the implications rather than deleting the old entry without a record.
Check that everyone is using the same information
Ask whether the schedule reflects the ownership, acquisition date and use history provided to your accountant. Confirm how new works should be added and whether an older schedule needs updating. Make clear which amounts came from invoices and which were estimated.
A useful handover includes the schedule, your change register and any unanswered questions. This helps prevent the same information being requested repeatedly at tax time.
Keep cash flow and deductions separate
A deduction appearing in a schedule is not a cash payment into your account. Your holding budget still needs the actual loan payments, operating costs and planned expenditure. Have the accountant explain how the applicable deductions affect your particular tax estimate.
Use repairs vs improvements to prepare information about works, and the cash-flow checklist to plan the cash commitments. For questions spanning the property’s history and your next decision, explore the property tax advice service.
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