Depreciation Tax Deductions for Property Owners

Many investment property owners are missing out on substantial tax deductions every year because they are simply not aware of all their depreciation entitlements

What is a Depreciation Deduction?

Depreciation is the reduction in value of an asset that occurs over time due to everyday wear and tear. Savvy Property Investors know this and claim tax deductions for that decrease in value every year.

Basically, the building and the furniture, fixtures and fittings are getting older and wearing out, so the tax law allows investors to claim part of the cost each year as a tax deduction.

Typical Items that can be Depreciated

Rental property investors can depreciate hundreds of household items for tax purposes, including dishwashers, dryers and even built-in coffee machines.

Other eligible but often overlooked items include; pumps attached to pools, free-standing spa baths, children’s cubby houses and water tanks.

Capital Works Deductions

Many investment buildings are eligible for depreciation claims based on actual or historical construction cost of the building.

This generally applies to buildings built after 1985, however extensions and alterations to older buildings such as new kitchens, bathrooms, carports, garages, patios and barbecue areas built after September 1985 in older properties can be eligible for a capital works tax deduction.

We can help you Maximise Your Deductions

Property investors can take steps to minimise their tax by ensuring the full and correct effective life of all depreciable items including the original construction cost of the building is claimed.

If you own a rental property, we recommend that you contact Alan Beck at Beck Partners – Chartered Accountants about getting a Depreciation Report prepared to maximise the depreciation and capital allowance tax deductions that you can claim every year.

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