This week’s tip is property investment tax benefits. The cash flow of an investment property is very important.
Generally, we receive two ways of generating that income. The first is the rental income from the property.
The other factor that can really change the yield or the cash flow of the property is the tax benefits. With an investment property, there are generally two types of tax benefits in terms of depreciation.
Property Investment Tax Benefits on the Building Structure
The depreciation you can claim on the building structure itself can be claimed over the first 40 years. For example, if the house you bought or are looking at buying is 20 years old, you’ll have 20 further years of tax depreciation on the building, and the cost of the building structure.
Property Investment Tax Benefits on Fixtures and Fittings
On the depreciation on the second tier are the fixtures and fittings. These are things like carpets, light fittings, ceiling fans, air-conditioners, etc.
What you need to do when you buy the next investment property is get a quantity surveyor to do a tax depreciation schedule. Generally, this is a one-off report. Then every year your accountant will work out the tax depreciable items based on that report.
During the time of ownership of that investment property, if you add any value to the property, and replace items, always keep a track of all that expenditure.
Speak to your accountant every year just to make sure that you are getting the maximum property investment tax benefits and claiming everything that’s legally possible so that tax benefits and depreciation can really add to the long-term income of the property.
It’s important to keep those records, have them in one place, and always, review with your accountant, how that property is performing.
You’ll get a quantity surveyor to do the depreciation schedule and the accountant will be able to work out those costs based on the schedule that the Australian Taxation Office will allow.
If you need any help with those tax depreciation schedules you are welcome to contact me. You can book a time in my calendar by clicking here.
See you next week.
Regards,
Geoff Tomkins
Buyers Advocate
PH: 0404 852 781
