Property tax depreciation: Don’t miss out on one of the largest tax deductions for property investors

Property Tax depreciation is a significant tax deduction for property investors alongside interest expenses.

If you are a property investor, you are entitled to a range of taxation benefits, but many do not take into consideration the potential to significantly enhance cash flow and overall returns by capitalising on this valuable tax deduction.

What is property depreciation?

As a building gets older, its structure and the assets within the building are subject to general wear and tear. In other words, each year, the value decreases and thus, depreciates.

The ATO allows owners of income producing properties to claim this depreciation as a tax deduction.

One of the key benefits of depreciation is that you don’t need to spend money to benefit from the claim. Depreciation allows investors to recoup a portion of their property's simply by owning it.

Tax advantages of claiming depreciation deductions

By claiming what you are legally entitled to, investors can substantially reduce their taxable income, lower their overall tax liability and increase cash flow.

How can I claim?

The easiest way to claim depreciation on your rental property is to get a tax depreciation schedule prepared for your property.

TaxAssist can arrange for a Tax Depreciation Schedule which covers all deductions available over the lifetime of a property to ensure you maximise your cash flow. The cost of a Tax Depreciation Schedule is also 100 per cent tax deductible.

What information is needed to complete a tax depreciation schedule?

Your local TaxAssist Accountant can help with this. They will need your name on the property contract, property address and purchase information to arrange the depreciation schedule.

Our valuation partners can contact the property manager or tenant directly to arrange access to the property, and a property inspection is conducted where all the depreciable assets will be noted. The original construction cost of the property as well as any renovations will be estimated and recorded by the property inspector.

Following this, the tax depreciation schedule will be completed, you will be sent a copy, and your TaxAssist Accountant can ensure you capitalise on this valuable tax deduction at tax time.

How we can help

If you have already completed this year's Tax Return, contact your local TaxAssist Accountant who will be able to amend your Tax return with the claimable depreciation. Call us on 1300 513 332 or contact us here if you'd like further information.

Date published 16 Aug 2024

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.