Depreciation – A Great Tool For The Investor

As you gain more knowledge of the industry of property investment, the purchase of property for rental, that is, you gain more understanding of the scope of your investment. Many people are unaware that the expense of purchasing property is not the only expense you can claim when that purchase is for investment purposes.

  • You are able to claim the interest that is charged on the loan.
  • You can claim for the cost of a regular pool or garden maintenance contract.
  • You can claim for any form of repair or maintenance.
  • You can claim for the repair or replacement of any item that is included in the lease.

You can also claim for the DEPRECIATION of many items that form part of the dwelling. For some, this claim alone can amount to much higher in tax claim gains than all the others put together.


So What Sort of Items Might This Be You Ask

The fixtures and fittings that you may be able to claim depreciation on are:-

  • Hot Water System;
  • Oven;
  • Cooktop;
  • Range Hood;
  • Air Conditioning Systems;
  • Free Standing Items;
  • Blinds or Curtains;
  • Floor Coverings; and
  • Capital Work Expenses.

Depreciation is calculated over the effective life of a particular item. This effective life is reflected in the number of years you can claim against any one item and is determined by the Australian Taxation Office (ATO).

The ATO have set down some very detailed guidelines regarding which items can be depreciated and at what level they can be depreciated.

Considerations that come in to play when determining this will include how much the item cost. You can purchase second-hand items for your investment. The cost will simply be calculated on the cost to you, not its real value. Other considerations are what type of asset it is and how old it is. Know that it is never too late to depreciate an item.


Employ a Professional

It is important to start your investment strategy correctly. When you want to have your rental assets managed you can come and see the best at Focus Property Management. We understand this industry like no other and consider ourselves professionals in all aspects.

We wholeheartedly recommend you employ a professional quantity surveyor to take stock of your investment’s assets and supply a detailed schedule of the value of its depreciable items.

A good accountant is also going to be your best source of information and guidance in how and when to make this and other claims to improve your investment cash flow.

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