More Important Than Ever To Claim Depreciation

Friday 11 Sep 2020

COVID-19 is placing financial strain on many property investors nationally so, it’s more important than ever that investors do all they can to maximise their cash flow in these unprecedented times.

Property depreciation unlocks hidden cash flow from your investment property as a non-cash deduction, meaning that investors don’t need to spend money to be eligible to claim it. Here’s what you need to know.

Depreciation is the natural wear and tear of a building and its assets over time. The Australian Taxation Office (ATO) allows owners of income-producing properties to claim this depreciation as a tax deduction under two categories – capital works and plant and equipment.

Capital works deductions relate to claims for the wear and tear that occurs to the structure of a building and any fixed items like the walls, doors and driveways.

Plant and equipment assets refer to a property’s easily removable fixtures and fittings like carpet, blinds and hot water systems. Depreciation deductions for these assets are calculated based on their individual effective life set by the ATO.

If you have owned an investment property for a number of years and haven’t claimed depreciation, you could be missing out on thousands of dollars. A BMT Tax Depreciation Schedule allows you to adjust previous tax returns to ensure that you claim every dollar you’re entitled to.

If you renovate your investment property, it’s important to organise a tax depreciation schedule. When you renovate, you can claim any un-deducted deductions for eligible assets in the year of removal through a process called scrapping.

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

A detailed site inspection is essential to achieve the highest possible deductions while maintaining full ATO compliance. To learn more about depreciation and the deductions you could be entitled to.