Depreciation, making your first investment possible

Article provided by NBtax


By Chris Page
Australia definitely is the place to be right now. Pretty much every state and territory in Australia appears to be enjoying incredibly good property growth. The apartment market is rising and developments are selling out before they’re even built. The low density residential markets in the middle and outer suburbs too are enjoying solid growth.

With the property world doing well in Australia, you’d think it’s the perfect time to buy, but it’s proving to be probably the hardest its ever been for first time Aussie investors to enter the market. Banks are asking for bigger deposits, interest rates are on the down turn, and first home buyer grants are only for those first time buyers that want to live in their homes. The question many of us ask is; “Is the government doing anything to help first time investors in Australia?” 

The answer is yes, and they did it 3 decades ago. The introduction of negative gearing and the golden gem that is Property Tax Depreciation, gives investors the chance to reduce the after tax cost of their investment, increase their cash flow all while having a property asset appreciate.

Property Tax Depreciation can be an excellent way to make negative gearing work in your favour. Current interest rates, and a competitive rental market make it very easy for a negatively geared investment to become positive. Positive is good – except for the additional burden of a tax bill!

Understanding your property investment, and the cost of it before you buy is prudent, and knowing the available property tax depreciation can, if anything boost your potential buying power. That extra $10-15k of deductions can make a huge difference in the property game.
Property Tax Depreciation is calculated by combination of areas;
  1. Capital Works, or Building Allowances – this relates to the basic structure of your property, the concrete floors, plaster and/or brick walls, the ceiling and roof. These components depreciate over a 40 year term.
  2. Capital Allowances, or Depreciating assets – these are the items in your investment that lose value more quickly. Like the air conditioner, white goods, kitchen appliances, carpets, and lifts. These items depreciate much sooner than building allowances and add the most benefit in the first 5-10 years of the assets life.
Understanding how property tax depreciation works is pivotal when making your first property investment, or any property investment for that matter. As property tax depreciation diminishes over time, the older the property, the less property tax depreciation there is going to be available. One might say it’s always wiser to purchase newer property – this ensures you’ll be able to claim the maximum available property tax deprecation, putting more in your pocket during the life of your investment.

So you’ve bought your investment? Then we come to the harder part – who do we trust? Who do we go to, to ensure we have a maximised property tax depreciation schedule?

In the eighties when residential property tax depreciation was introduced to the Australian taxation system, there was only one company that people turned to; Napier & Blakeley.

Napier & Blakeley were the first professional company to provide residential property tax depreciation advice, and over three decades on, they’re still the market leaders and still providing that same trustworthy advice.

In a world that’s constantly moving forward at a never ending pace, Napier & Blakeley knew it was time to create a simplified alternative for first time investors. was born. A one stop shop you might say, where you can educate yourself on how depreciation works, how it helps you and how you can use it to maximise your financial position. It’s also where you go to, to in just a few simple steps, to order your property tax depreciation schedule.

It’s tax time, and if you have purchased an investment property in the past year, make sure you’re well equipped with a property tax depreciation schedule that’s best for you.


Disclaimer: while due care is taken, the viewpoints expressed by contributors do not necessarily reflect the opinions of Your Investment Property.

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