Tax Depreciation


You’ve worked hard to buy an investment property but have you made sure that you’re maximising the cash flow your property is producing?  The more efficiently you manage your portfolio, the sooner you’ll be buying your next investment.

Did you know that any property built after 18 July 1985 is eligible for depreciation benefits on its historic construction costs?

80% of property investors fail to take full advantage of the tax benefits of owning an investment property.

Investors are missing out on thousands of dollars worth of tax savings because they don’t understand depreciation.
Many don’t realise that regardless of whether they have spent any money on their property, the wear and tear on their asset and its fixtures can be offset against any income they earn from the property.  Property depreciation is a non-cash deduction available to income producing properties and can be claimed on both positively geared and negatively geared properties.

Tax benefits associated with negative gearing can sometimes be equivalent to 60% of the total purchase price of a property.  Even decorative garden sculptures, common areas in an apartment building, tree houses or recreational facilities may be legitimately claimed.

Other costs that the Australian Tax Office (ATO) allows to be deducted include interest costs, maintenance expenses and holding costs such as building insurance and rates.
Obtaining a Tax Depreciation Schedule from the outset ensures all expenses and items are deducted to their full capacity.  Investors always look for the greatest return on their investment and the best place to start is by securing the services and advice of a professional.

At First National North Haven we have the local knowledge and experience, supported by leading edge technologies to ensure we provide the right and most appropriate advice on property and property management.

We also have access to a range of experts associated with property management so clients can enjoy all the benefits of property ownership.
The constantly changing ATO rules make it essential for investors to use competent depreciation companies like BMT, to undertake an onsite inspection of their property.  Desktop estimates no longer suffice.
It’s important to also understand the difference between repairs and capital improvements when it comes to tax time.
Repairs and maintenance cover any work done to fix damage or deterioration in your investment property and can be claimed as a tax deduction within the current financial year.

Work completed to prevent deterioration is defined as maintenance such as servicing an air conditioner.
Capital improvements improve the condition or value of an item beyond its original state at the time of purchase.  They can be depreciated or claimed as capital works deductions over time.

To make sure you’re maximising the return on your investment, speak to your Property Manager about any repairs or renovations they recommend to improve the rental return on your property.

Then discuss this list with your financial advisor and decide whether it’s in your best interest to invest any disposable income in some improvements.