Fancy a villa in Tuscany, what about a Condo in LA or Loft apartment in New York? I do!
But can I claim depreciation on this property… The short answer is yes!
The main difference, however, is in regards to claiming the building allowance – that’s the wear and tear on structural elements of the property like bricks and concrete.
With Australian properties you’re entitled to claim 2.5% of these construction costs per annum, as long as the property was built after July 1985. The rate for overseas properties is the same – but the date is different. Construction of an overseas property must have commenced after 1990.
So if you want to maximum your depreciation benefits on an overseas property, look for a newer property built in the last decade or two. Internal items like carpets, ovens, lights and blinds – can also be depreciated, as you would with an Australian property. This is often referred to as plant and equipment.
A good place to start your research is on the ATO’s website. You can download a publication called Tax Smart Investing: What Australians Investing in Overseas property needs to know.
Like any property investing, you’ll need to do your homework, research the local market, find out about rental yields and occupancy rates. but the best thing is – this can all be done on-line these days.
The main barrier to depreciating an overseas property is working out the constructions costs, along with the expense of flying a quantity surveyor overseas.
Washington Brown has a number of affiliations around the world. We regularly inspect properties in London… New Zealand… I even did an inspection in Koh Samui (Thailand) recently.
Here’s a video I created about claiming depreciation on overseas property, I hope you enjoy.
So there you have it. You can still invest in overseas property and reap the benefits of the Australian Tax system’s depreciation laws. But remember, the property must have been built or renovated after 1990.
If you need a depreciation schedule for your investment property – get a quote here or let us prepare an estimate of the likely deductions available to you – just submit your property for a free review here. Start claiming depreciation on your overseas property today!
Today, I thought I would go into why I entered the property market to begin with
You see, when I was 17 and while working at McDonald’s and doing my HSC, my future brother-in-law – a developer – said two things that changed my life: “You can only ever make real money working for yourself” and “McDonald’s really is a property development company … they just sell hamburgers on the side”.
As I was flipping those burgers I was thinking “there’s got to be more to life”… and as I tried to work out what he meant by McDonald’s being a property developer I enrolled in a Bachelor of Construction Economics. The course led me to becoming a quantity surveyor.
Before this I never really had an interest in property so his advice certainly steered my career path, because it was during my degree back in 1993 that I applied for a cadet role at Washington Brown. Now I own the company.
A few years into my work at Washington Brown, aged 25, I wrote a thesis on property depreciation, and thought that this could be a good business opportunity.
This is where part of the advice kicked in. You never make real money working for someone else. So I left Washington Brown, and my mentor who then owned the company, and I started my own quantity surveying firm, Property Depreciation. I did that for about a year and half, and once my old boss at Washington Brown saw that it was successful, he invited me back as a partner. I haven’t looked back since.
The worst advice I ever got
The worst advice I ever received was from a financial planner who led me down the path of investing in shares. I have never lost money in property, but I certainly have with shares.
In hindsight, I should’ve stuck to what I know – property. But the allure of buying shares in a company that you don’t own, then sitting back and letting that money grow, was appealing.
Fast forward to the Global Financial Crisis and hey presto it wasn’t so alluring after all! I have always found that letting someone else make money for you ends in tears.
To me, investing in the stock market is the easy option, unless you know what you’re doing.
And while letting someone else make you money can work, I would rather back myself. Whether that’s investing in my business or trusting my property skills to know if an opportunity is likely to pay off.
So my own advice is invest and nurture what you know best – you.
If you need a depreciation schedule for your investment property – get a quote here or work out how much you can save using our free calculator.
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