Rental tax depreciation is essentially an allowance for the decline in value of the assets within an investment property over time.
When you purchase an investment property (for tax purposes), you acquire a building, plus internal assets of that building, such as air conditioners, floor coverings, window coverings, appliances, potentially furniture, and other items.
In purchasing the property, the assets become a deductible amount (like an expense) that you can claim within your tax return.
Claiming depreciation reduces your taxable income that can amount to thousands of dollars in savings each year.
To claim a tax deduction for depreciation, you will need to obtain a ‘tax depreciation schedule’ that outlines all available depreciation deductions to maximise the cash return from your investment property each financial year.
A comprehensive tax depreciation schedule is essential as it helps to:
Tax depreciation can be complicated to calculate, claim, and manage, without the guidance and support of an expert. We always encourage our investors to seek independent professional advice.