2. How do you make a claim for depreciation allowance?
In order to make a claim for depreciation you need a report that breaks down the property into different categories. This report is called a depreciation schedule.
The amount the depreciation schedule says you can claim effectively reduces your taxable income.
In a depreciation schedule a quantity surveyor will separate the plant items (oven, dishwasher, etc) from the structural elements such as bricks and concrete.
Why? Because different elements have different rates of depreciation, which are generally based upon how long the item will last.
For instance, if an oven costing $1,000 has a 10-year life – you can claim $100 against your taxable income for 10 years using the Prime Cost Method of depreciation.