Tax depreciation can improve your investment returns

If you are planning to invest in property as a source of income, you might be able to take advantage of tax depreciation as a way of improving the return on your property investment.

What is tax depreciation?

Also known as property depreciation, tax depreciation is the ability to claim any loss of value in your investment property as it gets older.

There are two areas of allowable depreciation:

  • Plant and equipment – such as fittings, appliances and furniture.
  • Capital works – the structural elements of the property.

Tax depreciation can compensate you for natural wear and tear, or help you bear the brunt of maintenance, repairs and renovations. Both new and old properties can deliver you significant savings come tax time.

How do I claim tax depreciation?

To claim tax depreciation, you need to call in an expert. A quantity surveyor will perform an on-site inspection of your property and help you prepare a tax depreciation schedule, also called a property depreciation report. You then claim the depreciation of your property against your taxable income, reducing the amount you pay.

The ATO allows 40 claims on any property, meaning you potentially have 40 years of savings up your sleeve.

The real experts in property investment will take an estimate of tax depreciation into account when they are helping you through your decision to invest in property

Over time, tax depreciation can save you a lot of money and deliver a better long-term return on your investment.

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