Dealing with Property Depreciation

Property depreciation is a valuable tax benefit for investors. It refers to the gradual reduction in value of an investment property’s structure and assets over time. Recognising this decline, the Australian Taxation Office (ATO) allows investors to claim depreciation as a deduction, reducing taxable income and increasing overall returns.

Understanding Property Depreciation

There are two main types of depreciation: capital works deductions and plant and equipment deductions. Capital works deductions relate to structural aspects of the property, including walls and floors, and apply to buildings constructed after 1987. Plant and equipment deductions cover removable items like appliances or carpet. Both categories can help investors recover part of their expenses on the property.

Claiming Depreciation Deductions

Investors need to know which assets in their property qualify for depreciation and understand the ATO’s requirements. Since the process involves multiple details, many investors choose to work with a professional to ensure they claim deductions accurately and without missing any items.

Why a Professional Depreciation Schedule Helps

A depreciation schedule, prepared by a qualified quantity surveyor, is a detailed report that lists all eligible assets along with their depreciation values. This schedule streamlines tax time, allowing investors to confidently claim deductions while staying compliant with ATO guidelines.

In the long term, depreciation deductions can add up to substantial savings, helping investors retain more of their rental income and improve the profitability of their properties.

These articles are general in nature and are not financial or legal advice. Please consult your professional financial and legal advisors before making any decisions.