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Your oven, carpet and air con are getting older and the ATO actually wants to reward you for it. Yep, depreciation is the one kind of ageing that pays.
Think your property investment is already working hard? Time to check its KPIs. Because there’s one strategy that could quietly be adding thousands to your annual returns: depreciation.
Depreciation is a tax deduction for the natural wear and tear of your property and its fixtures. In plain terms, the ATO knows your oven, carpets and air conditioner have a use-by date and they’ll reward you for it.
According to BMT Tax Depreciation, savvy investors are uncovering an average of more than $12,000 in deductions in their first year alone. That’s money that improves your cash flow, reduces your taxable income and helps your property investment perform at its best.
Here’s a little inside scoop: newer properties tend to deliver bigger depreciation benefits. That’s because they come loaded with brand-new fixtures, fittings and construction costs that can all be claimed from day one.
Every shiny new inclusion, from flooring to kitchen appliances, has a depreciable life span. Each year, those items lose value, and that’s where your tax deductions come in.
Older properties can still benefit too, but some of their assets may have already used up part of their claimable life. You can still claim for the building structure and any recent renovations, but the pool of deductions is usually smaller. In short, the newer the property, the more potential deductions you can unlock.
Say your investment property earns $500 per week in rent, or $26,000 a year. A depreciation schedule could reveal $12,000 in additional deductions. That’s like finding a tree that grows money.
investors are uncovering an average of more than $12,000 in deductions in their first year alone
In today’s market, improving your cash flow isn’t optional, it’s essential. Depreciation can be the difference between just holding on and getting ahead. It’s one of the few ways to boost returns without raising rent or refinancing.
For property investors, that means:
You don’t have to be a tax expert. A specialist quantity surveyor like BMT Tax Depreciation can create a detailed report so your accountant can claim every eligible deduction correctly, year after year.
If you haven’t reviewed your property’s depreciation potential yet, you might be missing out on one of the simplest ways to supercharge your returns. Learn more at bmtqs.com.au.
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