- Investment Property Depreciation
What is Depreciation?
When it comes to investment property depreciation, it is important to understand exactly what you are eligible to claim.
Depreciation refers to the wear and tear on your property. The ATO allows investors to claim a tax deduction that reflects this deterioration.
In that way, the deductions are essentially built into the property when you buy it.
How Much Tax Can I Save?
The amount of depreciation that you are eligible to claim will be based on the age and type of property, as well as when you bought it.
For properties built after 1987, it is likely you can claim a deduction on the original construction cost. This is known as the Building Allowance and is claimed at 2.5% per annum.
For brand new properties, you can also claim deductions on plant and equipment assets within the property. This includes fixtures/fittings such as ovens, rain water tanks, vinyl flooring and hot water systems.
Please note, you can no longer claim ‘previously used’ plant and equipment assets. Read more about the Depreciation Law Changes here.
Learn how to calculate depreciation on your property.
Investment property depreciation is the icing on the cake when it comes to property tax deductions.
Investment Property Depreciation Articles:
Rent expenses are deductible to the price that they are incurred for the purpose of producing rental income. Sometimes, rental expenses can be deductible for periods even when the property is not being rented out. However, this is only the case provided the property is genuinely available for rent. This means, the property is being […]
Should I be taking control of my depreciation report or should I leave it to my SMSF? Your depreciation report will vary, depending on the entity that owns the investment property. The self-managed superannuation fund (SMSF) sector in Australia has seen tremendous growth over the past few years. This is not a surprise, given the […]
Did you know? Did you know that lower-priced property often has a higher depreciation ratio in relation to the purchase price? During one of my recent media interviews, a journalist asked me to explain my comments on this issue. Most of us know that higher-priced property tends to rent on a yield far less than […]
Claiming depreciation on residential property is one of the most important steps in an investor’s journey. But those new to property investing often overlook some important key items of depreciation. The three most commonly missed items property investors can claim are: • Design and professional fees • Council costs • Builder’s profit Most people know […]
If you own your own business, are you currently leasing commercial space but thinking of buying your own premises? Or are you considering investing in your next property but can’t decide between a commercial or residential investment? Commercial property has fared far worse than residential property in the years since the GFC and beyond. The […]
The recent depreciation changes have the greatest impact on the types of property you may choose to invest in. Some people prefer to invest in brand-new properties, while others opt for older property that they can renovate and resell for profit. So, which is the better investment strategy? Let’s look at this in actual finite […]
Step by Step Guide on How to Calculate Depreciation on a House for Taxes. Before getting scared off by the following explanation of how to calculate depreciation, you need to know that tax depreciation quantity surveyors can prepare a custom depreciation schedule for you. All you’ll need to do is hand it over to your […]
THE NUMBERS are in. There’s no denying it. It’s now a fact that not every property needs a physical inspection by a depreciation expert for the maximum tax deductions to be claimed. The truth is that the majority don’t need a physical inspection, saving you time and money. We’ve been saying this for a long […]
Client Name and Unit Number have been altered for privacy. Marie came to Washington Brown looking to maximise her tax depreciation deductions, having purchased a second-hand investment property in 2018. The house was originally built in 2000 and was purchased for $1,200,000 in 2018. The two storey house consisted of 4 bedrooms, 2 bathrooms and […]
Client Name and Unit Number have been altered for privacy. Having recently settled on an off-the-plan apartment in Clayton, Victoria, Paul’s accountant suggested he contact Washington Brown to maximise his tax deductions. The 74sqm, 2 bedroom, 2 bathroom apartment was purchased for $559,000 in 2020. As Paul was the first owner and had never occupied […]