Melbourne Property Depreciation

Property Tax Depreciation

If you own a commercial or residential property, you should know about tax depreciation. This depreciation is applicable on the assessable taxable income of the investment property.

Commercial PropertyHow does it work?

The property investors are allowed to deduct a percentage of original costs, incurred on plant, equipment, and capital works. So, this can include furniture, fittings, renovation cost etc. This depreciation will be effective throughout the life of the item, and for every financial year. The value of the capital assets keep depreciating over time, and it is written off each year. This form of depreciation is also known as tax deduction.

What kind of depreciation is applicable?

The tax deduction on the investment property, are of two types. One is on the plant and equipment, and the second one is on the capital works done on the building. Various items inside the property have different depreciation rates.

Hire the experts:

When you hire the professional experts at Asset Economics, you would get professional service from qualified inspectors, who will possess the knowledge and expertise. They would be able to identify which items require to be depreciated, and how one can get the savings.
For claiming maximum tax benefits, the property investors should complete the tax depreciation report, which should be fully compliant to all the rules and regulations. And, this service would also be done by Asset Economics, who can produce reports, which are ATO compliant.

What is a property depreciation schedule?

The property depreciation schedule is used for setting out the depreciation and write-off claims for existing and new investment property. Depending upon the kind of property, the tax report can provide a calendar for the write-off of buildings, and depreciation on plant and equipment. So, this will ensure that the owners get maximum tax benefits. Depending upon the allowances, the report will calculate the amount, which can be deducted each year.

What are the benefits of claiming tax deduction?

When the investors claim depreciation allowances on the investment property, it increases the property’s value, and gives them a better return on investment. The depreciation allowances are combined with the negative gearing factors, like interest on mortgage, maintenance and repairs, so that the taxable income is reduced, and less tax would need to be paid. This will help in improving the cash flow. These savings can be used for reducing the debts, and reducing the burden on investment mortgages.

Matthew Stanely, managing director at Asset Economics