Expert Advice: by Tyron Hyde
I used to advise investors to buy property built in 1986.
Because residential properties built between July 18 1985 and September 15 1987 used to attract a 4% building depreciation rate over a 25-year life span.
Everything built since then attracts a 2.5% rate over a 40-year life span.
So the net result of purchasing properties in this odd two year period was increased tax deductions – and therefore cash flow – at a faster rate.
But as of September this year, the loophole effectively closed.
That means any properties built before September 1987 incur NO building allowance.
However, if you buy a property where construction commenced in 1988, you still have 16 years to depreciate the building.
That's over 40% of the original construction cost left for you to claim – I know which one I prefer!
So if you’re in the market for an investment property - it’s worth knowing the date that construction commenced – especially if it’s around the mid to late 80s. It could make quite a difference.
The Australian Taxation Office has identified Quantity Surveyors as appropriately qualified to determine the original construction cost, where the costs are unknown.
Tyron Hyde is a director of quantity surveying firm Washington Brown. For more QS Corner tips and information on property depreciation including a FREE online tax depreciation calculator, visit www.washingtonbrown.com.au
To read more Expert Advice articles by Tyron Click Here
Disclaimer: while due care is taken, the viewpoints expressed by contributors do not necessarily reflect the opinions of Your Investment Property.
Top Suburbs :
Get help financing your investment
Do you need help finding the right loan for your investment?
When investing in property, it is important to make sure that you not only have the best rate available, but also have the correct loan features for your needs.
Why not let us help?
Simply complete the form below, and let one of our experienced advisors assist you. There is no charge for this service.
We value your privacy and treat all your information seriously - you can check out