Appreciate Depreciation in Investments

Did you know you could be missing out on thousands in tax savings each year because you are not fully maximising depreciation allowances on your investment property?

Depreciation is one of the most important (yet often overlooked) tax saving benefits available to investment property owners. Just like you claim wear and tear on a car purchased for income producing purposes, you can also claim the depreciation of your investment property against your taxable income.

There are two types of depreciation allowances: plant and equipment such as carpets, blinds and whitegoods; and, capital works items such as windows, brickwork and doors. Plant and equipment items have varying rates of depreciation while capital works items are claimed at 2.5 per cent per annum.

Key facts about depreciation:

  • Your property doesn't have to be new 99 per cent of properties will attract some depreciation allowances.
  • Depreciation is the only deduction that can be subjective. All other expenses - such as interest, strata fees, etc. must equal precisely the amount you have paid out.
  • You can claim deductions on renovations, but get a professional assessment from a quantity surveyor before you renovate so you can claim full entitlements.
  • Depreciating your investment property can dramatically improve your bottom line.
  • If you have not been maximising or claiming your entitlements you can backdate your tax return.

How much can you save?

Savings can be in the thousands. Try Washington Brown’s online tax depreciation calculator and get a free estimate of the potential tax savings you could be getting on your investment property.

Looking to buy?

One of the key benefits the online tax depreciation calculator is that you can find out which properties will give you the best return before you buy.

And remember, investor borrowers are the most sought after customers by banks and lenders due to their equity position and borrowing history. Talking to a Loan Market mortgage broker will help you useyour position to secure the right loan for your finance needs.

Artcle by: Tyron Hyde, AAIQS, Director of Washington Brown