Depreciation – Everything You Need to Know
The older any asset gets, the more likely it will lose its value. Even with the best of efforts to maintain and care for your investment. Is your car worth the same as when it was brand new? Unless it’s a classic car, it probably has depreciated in value.
When it comes to your Australian investment property, depreciation is a non-cash expenditure. Simply put, you are allowed to claim a tax deduction on the parts of your property investment Brisbane that are expected to ‘wear out’ over time.
Depreciation is determined as reducing the value of an asset over its estimated useful economic life. It is a tax deduction, not a write-off.
However, the rules around depreciation allow you to claim the perceived loss in value of the property against your taxable income.
By using depreciation to offset your taxable income, many Australian investors have reduced the holding costs of owning an investment property.
If You Have it, Claim it – Property Depreciation
Property investors looking for ways to maximise the cash flow from their investments will typically factor depreciation into their cash flow analysis. Some investors are either unaware of property depreciation or fail to claim so. If you want to claim depreciation, you need a report prepared by a Quantity Surveyor. They are specialists in this area and set out the schedule of what you can claim as depreciation.
The ATO allows owners to claim depreciation on the structure of the building (capital works) and certain mechanical assets (plant and equipment).
Capital works deduction (Division 43) may be applicable for:
Buildings or extensions (alterations + improvements).
Alterations and improvements to the leased building and shop fit-outs and leasehold improvements.
Structural improvements like fences and driveways.
Earthworks for protection of the environment.
Find out more about the Depreciation here: https://proptraders.net/depreciation-everything-you-need-to-know/
