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.
Learn how to calculate depreciation on your property
Investment property depreciation is the icing on the cake when it comes to property tax deductions.
