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Tax Depreciation for Rental Property

Property Management

A building’s value is depreciated as time goes by and as it wears out. Property investors are allowed by the Australian Taxation Office to claim tax depreciation for rental property deduction relevant to the plant and equipment materials within. It is a non-cash deduction which means property owners does not need to spend money to be entitled.

Tax Depreciation for Rental Property

Property owners are advised to hire a quantity surveyor in order to maximise all deductions for tax depreciation for rental property. Quantity surveyors will be able to accomplish a modified tax depreciation schedule. Depreciation schedules are used by property owner’s accountants when formulating a tax return.  

Tax depreciation for rental property can actually result to a positive cash flow by taking the cost of the wear and tear from a property. The amount of tax depreciation that you can claim will depend on four elements: Plant Assets, Building Allowance, Pre-Purchase Renovation and Post Purchase Expenditure.

Plant assets is the actual value of the plant asset. Building allowance is applied to properties constructed after 1988 and it is the historical cost to build the original building. Pre-purchase renovation is the original cost incurred by the previous owner for any improvements. Post purchase expenditure is the cost incurred by the new owner after buying it.

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