Owners of properties which generate an income are eligible for significant taxation benefits.
The Managing Director of BMT Tax Depreciation Bradley Beer says “Research shows that 80% of property investors are failing to take full advantage of property depreciation and are missing out on thousands of dollars in their pockets.”
Depreciation is often missed because it is a non-cash deduction. The investor does not need to spend money to claim it. As a building gets older, items wear out – they depreciate. The Australian Taxation Office (ATO) allows property owners to claim this depreciation as a deduction.
Depreciation: An investor profile
An investor has purchased a property for $420,000 and is receiving $490 per week in rent for a total income of $25,480 per annum. The estimated expenses for the property include interest, rates and management fees, which total $32,000 per annum. The following scenario shows the investor’s cash flow with and without depreciation. A typical $420,000 unit will depreciate by around $11,500 in the first full financial year.
In this example the investor uses property depreciation to go from a negative cash flow scenario, paying out $79 per week, to a positive cash flow scenario, earning $3 per week on the property. By claiming depreciation this investor will save $4,255 for the year.
To learn more about property depreciation, visit the BMT Tax Depreciation page for investors on their website by clicking here. Alternatively, for obligation free advice about any property scenario, contact one of the friendly staff at BMT Tax Depreciation on 1300 728 726.
Article provided by BMT Tax Depreciation.
Bradley Beer (B. Con. Mgt, AAIQS, MRICS) is the Managing Director of BMT Tax Depreciation.
Please contact 1300 728 726 or visit www.bmtqs.com.au for an Australia-wide service.