What Is Tax Depreciation?

 In Property Management

Watch our conversation with Alan from BMT to understand more about tax deduction. If you have any queries, drop us a line at kaylee@thepropertyexchange.com.au or call us at 08 6380 2200 we would love to hear from you.

Kaylee: We’re here today at local favourite, The Little Pantry talking to Alan from BMT. So Alan, what is the simplest way to explain what tax depreciation is?

Alan: So, depreciation is a deduction that the ATO allows every investor to actually claim on a year-to-year basis. It’s through the wear and tear of the building itself. So, for every year that you have it rented for, you’re able to claim deductions through your tax return.

Kaylee: Okay. So then, can your every day accountant just do that as part of your tax return?

Alan: Not quite. So, the ATO actually has a tax ruling, 97/25 that actually specifically states that QSs are the only ones recognized to estimate on construction costs for a depreciation purpose.

Kaylee: Okay. So then, in terms of return, is it the same for an old property compared to a new property and how does that work?

Alan: I like to say with everything in life, the newer, the better. But that’s not to say that older properties aren’t worthwhile getting done. Quite often, you’ve got older properties that a previous owner has had renovations done to the place that the current owner may not know about. So, it’s part of our job to actually dig a little bit deeper and go through, basically just find out the maximum amount that you’re entitled to.

Kaylee: Great. That’s great. Well, there you go. Please, do contact myself or Alan so we can help you maximize your return.

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