How property investors can claim $9k in deductions

Investors are allowed to claim deductions on general property aging wear and tear and internal items breaking down, which is referred to as depreciation.

The first step on claiming depreciation, according to BMT Tax Depreciation, is on capital works deductions on a property’s structure and items permanently connected to the property, which can total $5,065 for one year.

This can then be repeated for the next 40 years, starting from the construction of the property.

Investors can also claim depreciation on removable plant and equipment assets.

These include:

• Carpets (for $1,285);
• Blinds (for $829);
• Ovens (for $354);
• Hot water systems (for $331);
• Garbage bins (for $296);
• Smoke alarms (for $268);
• Cooktops (for $176);
• Door closers (for $167); and
• Exhaust fans (for $122).

Hanging onto a property for two years can result in even higher depreciation values, as Mr Beer noted many items depreciate at a higher rate in the second year.

Renovations can not only add value to a property, but also allow investors to find even more deductions to claim.

“Renovations can also be especially lucrative for property investors so they would be wise to review the depreciation value of different items before deciding on their final renovation strategy, as they may be able to offset some of the cost of the upgrade by being clever with what they purchase and how they renovate,” Mr Beer said.

While this is all applicable for new properties, Mr Beer mentioned second-hand properties are only applicable if contracts were exchanged before 7.30pm, 9 May 2017.

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