Tax and Depreciation
How Does it Work?
Every property is subject to wear and tear over time, this is called depreciation. Depreciation can be claimed by any property owner who obtains income from their property. Whilst seasoned real estate investors know that they can make the most of property depreciation, new investors have little or no idea about it.
There are two types of allowances available; depreciation on plant and equipment and depreciation on building allowance.
- Plant and Equipment refers to items within the building such as light fittings, stove, carpet & blinds etc.
- Building Allowance refers to construction costs of the building itself, such as concrete and brickwork
The Australian Taxation Office (ATO) allows property investors to claim this depreciation as a deduction of their taxable income. Property Investors can make a significant difference to cash flow by claiming all of the depreciation they are entitled to.