Depreciation is your friend


How would you like to receive an extra $5,000 or more in the first full year of owning your property? Many investors do not fully understand the value of depreciating their property. It’s a legal, tax savvy way to increase your income.

While most investors are familiar with negative gearing, our experience shows that the majority of property investors do not take advantage of property depreciation laws.

A number of new investment property buyers understand the tax benefits of depreciation and use this as a reason to buy property that is new. The benefits provide a welcome boost to their cash flow. 

Depreciation is a long term strategy, if worked correctly, there are even more savings available beyond the first ten years of the life of your home.

Here’s a quick rundown. For new property you’ll need a valuation of the building from a quantity surveyor. They must be registered with an ATO accreditation.

A property depreciation report makes it easier for accountants to calculate your depreciation [and returns to you]. Your report should include:

  • A site inspection
  • A list of values for fittings, fixtures and the structural elements of a building
  • Calculated deductions projected for up to 40 years
  • Cover any extensions or renovations – even those of a previous owner
  • Accelerated depreciation for assets that qualify
  • 100% deductions for immediate write-off for items that qualify
  • Deductions split based upon applicable ownership ratios

Don’t forget your report fees are tax-deductible.

New investors or those considering entering the property investment market, the potential for new and old properties to attract depreciation benefits can be confusing and foreign. You should have an expert provide additional information.

If you’re not sure, Property Friends understand these laws and can help you or suggest an expert to assist. Don’t forget you can always speak to other Property Friends and use their feedback!

You can learn more about our approach to property advising here , or alternatively, feel free to get in touch and have an obligation-free chat about how Property Friends can help you.  

For daily property investment updates follow our Facebook page here.

Property Friends is a specialist Property Investment Strategist that provides solutions for people aspiring to financial independence, choices in retirement, or leaving a legacy. (03) 9758 5331

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Uwe Jacobs Property Strategist

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