New property investors could benefit greatly from education on legitimate depreciation deductions for investment properties so they don’t miss out on thousands of dollars in tax savings.
According to BMT Tax Depreciation, the recent property boom has seen many new investors hit the real estate market. However, these newbies might not be aware they can claim tax deductions on the structure of the building and specific assets found within an income producing property as they depreciate over time due to wear and tear, or ageing.
The Chief Executive Officer of BMT Tax Depreciation, Bradley Beer, says property investors may be surprised to learn of the types of items and amounts that can be claimed in tax deductions. For example, he says an investor who has bought a new two-bedroom apartment may be able to claim tax deductions for assets such as carpet, hot water systems and kitchen appliances.
Investors are also entitled to claim deductions for assets such as air conditioning systems or appliances such as dishwashers and washing machines.
Beer says buying an investment property can be challenging, and once settlement takes place, it’s normal for a new investor to let the property manager take over and to view the investment more passively.
“However, by continuing to be proactive with your new investment, you can structure the asset in such a way with your advisors that it is generating maximum cash flow for your portfolio.
“Tax depreciation is a component of this process and quantity surveyors like BMT are expert at finding all legitimate tax savings and won’t charge for their services unless they find double the number of deductions then the cost of the tax depreciation schedule,” he says.
According to CoreLogic, investors currently account for 46.6% of new mortgage lending and investor-owned dwellings account for 27% of all housing stock, to a value of around $1.37 trillion.