Often I’m asked by investors who are about to purchase an investment property “what should I look for in order to maximise my depreciation claim?”.
People seem surprised when I respond by saying whilst depreciation is an important part of the property investment equation, I recommend that it should not be part of your initial decision-making process.
Prospective investors should first be asking questions like:
Where will I get the most capital growth? What’s the yield of the property? What’s the population growth of the suburb?
Once you’re satisfied on these fronts, THEN consider how to make depreciation work for you.
Here are four things to consider to increase the return on your investment property:
1. Carpet and Floating floors will depreciate at a greater rate than, say, a tiled floor which is only depreciable at 2.5% per annum.
2. Blinds and light fittings are highly depreciable and can often be written off immediately.
3. Split-system air conditioning systems provide higher depreciation compared to ducted ones - as the ducting itself is part of the building and only claimable at 2.5% per annum.
4. If built after 1987, can claim the building allowance component significantly increasing your claim.
Tyron Hyde is the CEO of Washington Brown and is considered one of Australia’s leading experts in property tax depreciation. He is also a registered tax agent. Washington Brown manages construction costs worth over $2 billion and completes 10,000 schedules annually. For a depreciation schedule quote CLICK HERE and follow the 3 simple steps or estimate your depreciation cost.
The Washington Brown Free Depreciation Calculator will give you an estimate of the depreciation deductions you could claim on your investment property
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Disclaimer: while due care is taken, the viewpoints expressed by contributors do not necessarily reflect the opinions of Your Investment Property.