Furnished properties and depreciation

There are no right or wrong answers when deciding whether to furnish your investment property. But there could be big tax savings in doing so, making it more appealing.

Furnished rentals tend to attract tenants looking for a short-term arrangement such as travellers and business professionals who regularly move for work. Furnished properties can also allow you to charge a higher rental rate and decrease the amount of time between tenancies by allowing tenants to move in quickly.

Investors often don't consider the advantage of additional tax depreciation deductions available on furniture. If a furniture asset was purchased directly for an investment property, you can claim deprecation.

Furniture is a type of plant and equipment asset. Furniture with a value less than $1,000 can be deducted using a low-value pool, allowing it to be depreciated at an accelerated rate 18.75 per cent in the year of purchase, then 37.5 per cent every year following). Higher valued furniture depreciates at a rate set by the Australian Taxation Office, based on each item's effective life, or how long it can be used to produce income.

A tax depreciation schedule is the best way to ensure you claim all deductions you're entitled to. 

Call in at your local TaxAssist Accountants for help with any of the above.

Article provided by BMT Tax Depreciation. Bradley Beer (B. Con. Mgt, AAIQS, MRICS, AVAA) is the Chief Executive Officer of BMT Tax Depreciation. 

Date published 11 Mar 2020

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.