Newspaper article The Observer (Gladstone, Australia)

Five Reasons Why Investors Should Claim Depreciation

Newspaper article The Observer (Gladstone, Australia)

Five Reasons Why Investors Should Claim Depreciation

Article excerpt

Byline: DALE WARE Commercial property, Ray White Gladstone

ANY owner of an income-producing investment property is eligible for significant taxation benefits.

Despite this fact, 80% of property investors are failing to take advantage of property depreciation and are missing out on thousands of dollars.

Property investors often assume they are ineligible or that it is not worthwhile to claim depreciation because they believe their property is too old or they have not owned the property long enough.

The reality is, it is worthwhile making a claim on any property.

Requesting a tax deprecation schedule that outlines what claims are available for a property owner can make a significant difference.

For many investors, depreciation can be the difference between a property that has a negative cash flow and turning the property into a positively geared asset.

On average, most investors can claim between $5000 and $10,000 in deductions in the first full year for any residential investment property.

This is no small amount, so for any investors wondering what property depreciation is, why to claim it and how to go about making a claim, the following points will answer the most common questions.

1. What is depreciation?

Depreciation is a non-cash deduction the Australian Taxation Office allows the owner of an investment property to claim a deduction due to the wear and tear of a building structure (capital works deduction) and its fixtures (plant and equipment depreciation) over time.

Depreciation is described as a non-cash deduction, meaning the investor does not need to spend any money to be able to claim it.

2. No property is too old

An investment property does not need to be new to be able to claim depreciation.

Though ATO legislation states owners cannot claim capital works deductions for any residential property in which construction commenced prior to July 18, 1985, there are no date restrictions for a claim for the depreciation of plant and equipment assets contained within the property.

On average, 15% of the total construction cost of a residential property is made up of plant and equipment, so it is always worth making an inquiry. …

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