Property depreciation deductions can make a significant difference to any investment property owner’s cash flow. Despite this, of all the deductions available to be claimed by investors, depreciation is the most often missed.
Every property investor can benefit from learning more about depreciation and discovering the process involved in finding out what deductions are available to claim.
Here are some key points to be aware of:
The Australian Taxation Office (ATO) allows the owners of any income producing property to claim depreciation deductions due to the wear and tear of their property.
Capital works deductions can be claimed on structural items such as bricks, mortar, walls, flooring and wiring.
Plant and equipment depreciation deductions can be claimed for the mechanical and removable assets contained in the property such as carpets, hot water systems, ceiling fans, door closers and garbage bins*
On average, investors can claim between $5,000 and $10,000 in deductions in the first full financial year.
To find out what depreciation is available for your property, speak with a specialist Quantity Surveyor such as Herron Todd White or BMT Tax Depreciation who can arrange a tax depreciation schedule outlining the deductions available.
* Under new legislation outlined in the Treasury Laws Amendment (Housing Tax Integrity) Bill 2017 passed by Parliament on 15th November 2017, investors who exchange contracts on a second-hand residential property after 7:30pm on 9th May 2017 will no longer be able to claim depreciation on previously used plant and equipment assets. Investors can claim deductions on plant and equipment assets they purchase and directly incur the expense for. Investors who purchased prior to this date and those who purchase a brand new property will still be able to claim depreciation as they were previously.