For property investors, tax depreciation remains one of the most underutilised yet impactful tax deductions available. While depreciation—the natural wear and tear on a property and its assets over time—is inevitable, savvy rental providers can turn it into a financial advantage. This is because the ATO allows owners of income-producing investment properties to claim depreciation as a tax deduction.
What is tax depreciation?
Depreciation applies to the gradual decline in value of a property’s structure, fixtures, and fittings over time. Importantly, while all properties experience depreciation, only investment properties qualify for tax deductions based on this wear and tear, making it a vital financial component for rental providers. These deductions apply to a wide range of assets within a property, from structural elements like walls and roofs to appliances and carpets, creating significant tax-saving opportunities across both new and established properties.
At Kay & Burton, we aim to help investors maximise returns, and tax depreciation has become a cornerstone strategy. By teaming up with experts like BMT Tax Depreciation, we support clients to claim these often-overlooked deductions and increase their cash flow.
Tax depreciation schedules
A tax depreciation schedule is important for investors looking to make the most of their property’s depreciation deductions. Created by specialised quantity surveyors, such as those at BMT Tax Depreciation, this one-off schedule allows investors to track eligible deductions over the property’s lifetime—typically up to 40 years. Not only is the schedule’s fee entirely tax-deductible, but it also enables investors to claim back missed dollars by adjusting up to two prior tax returns. According to BMT Tax Depreciation, their clients average more than $11,000 in first-year deductions for new properties, underscoring the financial impact that a thorough depreciation schedule can offer.
For property investors looking to maximise their returns, tax depreciation is an indispensable tool. By taking advantage of available deductions and ensuring a structured depreciation schedule, rental providers can better realise the long-term potential of their properties. If you would like further information about arranging a tax depreciation schedule please reach out to your property manager or our Director of Property Management Cath Stubbings by email at cstubbings@kayburton.com.au