Maximising Tax Benefits Through Property Depreciation: Don’t Miss Out!

If you own an investment property or recently completed renovations, there’s a good chance you’re leaving money on the table by not claiming all the tax benefits you’re entitled to. Many investors don’t realise the significant impact property tax depreciation can have on reducing their taxable income.

So, what is Property Tax Depreciation?
In the same way that business assets depreciate and can be claimed as a tax deduction, so too can investment properties. This includes both structural elements like bricks, windows, and concrete, as well as non-structural assets such as appliances, carpets, and blinds. A Tax Depreciation Schedule outlines all the deductions you can claim each year, for up to 40 years.

This could mean huge savings for you as a property investor. For instance, if a depreciation schedule from Washington Brown shows that you can claim $12,000 in deductions for the financial year, that $12,000 comes straight off your taxable income. So, instead of paying tax on $100,000, you’d only be taxed on $88,000. That’s money back in your pocket, just for understanding how depreciation works!

Who Can Claim Depreciation Deductions?
There were some changes to depreciation laws in 2017, which impacted how investors can claim on older properties. However, if you’ve bought a commercial property, a new build, or purchased under a company name, you can still claim both Plant & Equipment and Building Allowance components for up to 40 years, provided your property was income-generating from settlement.

Even if your property isn’t new, don’t dismiss the idea of a depreciation report just yet. Properties built after 1987 still qualify for building allowance deductions, and if you’ve made renovations, the new fixtures and fittings can be depreciated too, as long as the property was rented out post-renovation.

The 2017 Law Changes: What You Need to Know
The 2017 changes meant investors can no longer claim depreciation on second-hand, “previously used” assets (like old dishwashers or ovens). However, building allowance claims remain unaffected, and any brand new items you’ve installed during renovations can still be depreciated. This is great news for those who’ve recently updated their investment property. Just remember, the property must be income-generating post-renovation to claim the Plant & Equipment depreciation.

Is a Depreciation Report Worth It for Older Properties?
Absolutely! It’s always worth investigating. Even if your property isn’t brand new, you might be surprised at the deductions you can still claim, particularly on the building allowance side or for any new assets added during renovations.

Here’s the Best Part: It’s FREE to Find Out!
Property Women members get access to Washington Brown’s Calculator and a reduced corporate rate for their depreciation schedule. This easy-to-use tool gives you a clear indication of what you could be claiming, with no obligation. It’s a simple step that could lead to huge tax savings.

Don’t miss the chance to make your investment property work harder for you. With only one quarter of the financial year left, now is the time to take action and maximise your returns.

For more information on depreciation, or to ask about deductions and pricing specific to your property, you can submit a request here.

Get the most out of your property and minimise your tax—start today!