Investors - Are you correctly calculating your depreciation?

Investors - Are you correctly calculating your depreciation?


Many property investors fail to get the most out of their investment properties due to inadequately calculating property tax depreciation. Property Depreciation, simply put, is complicated and commonly overlooked, along with thousands of dollars in potential tax deductions.

If you have an investment property that generates an income, it is more than likely that you are able to claim property depreciation on your taxable income. This includes residential, commercial and industrial investments properties no matter how small or old they are.  

Discerning investors consider the rental return, location, and the historical growth of the area; but many fail to realise the tax deductable potential of costs such as management fees, rates, interest, repairs, maintenance and most importantly depreciation. More often than not, investors fail to consider the financial benefit of claiming depreciation prior to making their purchase and ultimately lose out.

Property Tax Depreciation plays a very big part in maximizing the return of a property and more importantly minimizing taxable income. Not knowing the true depreciable value of your investment property could mean you’re missing out on thousands of dollars of depreciation over the life of your investment.

A quantity surveyor can provide you with a detailed depreciation report. This is a professional who specialises in valuing the cost of construction work. They’ll provide a report on the rate of depreciation claimable on your property, and when you can claim. Many people cringe at the cost of a depreciation report but some surveying companies actually guarantee two or three times the cost of the report in deductions, and a quantity surveyor’s fees are generally 100% tax deductible.  Some quantity surveyors are better than others, so always employ a specialist firm that will visit your property.

An investor who figures out their numbers accurately prior to making a purchase will gain a better perspective on the affordability of the property and future cash flow; ensuring they get the most out of their investment.



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