Is it possible to turn a buyer into a landlord and then a tenant in the same transaction, and help them save a dollar in the process? BMT Tax Depreciation believes that many new investors pursuing a strategy of ‘rentvesting’ may be leaving thousands of dollars of legitimate tax savings on the table by not using tax depreciation.
Working with your buyers can be a triple win if they are following a Rentvesting approach. Your buyer becomes your Landlord and if your service is invaluable to them, they may just become your tenant too.
Rentvesting refers to the choice of some Australians to purchase property in an area they can afford in order to generate rental income and enter the property market, whilst simultaneously renting a property in an area where they want to live.
“The rentvesting approach to property investing seems to have gained a lot of traction in recent years as it can allow some Australians the opportunity to achieve property ownership without having to sacrifice their preferred lifestyle,” said Bradley Beer, the Chief Executive Officer of BMT Tax Depreciation.
“There are many advantages rentvesting offers, including living in your favoured suburb, flexibility to live closer to work or to move when your circumstances or property needs change. However, tax depreciation may be an underestimated advantage of this strategy,”.
The latest data from the Australian Bureau of Statistics (ABS) on Housing Occupancy and Costs for 2013-2014 revealed that 263,000 Australian households own an investment property but are currently renting their usual residence.
The Australian Taxation Office (ATO) recognises that the structure of a rental property and the assets within it, experience wear and tear as they age over time and therefore allows for tax concessions for investors and rentvestors to account for this deterioration. Quantity surveyors such as BMT are used to uncover these deductions and to maximise depreciation claims for property investors by providing depreciation schedules.
“Renovating an investment property so it is ready for a tenant may initially hit the back pocket. However, rentvestors can recoup some of this initial renovation cost by claiming deductions for them,” said Bradley Beer.
Deductions can be claimed over a property’s lifetime which is forty years according to the ATO, meaning that rentvestors may be setting themselves up for years of additional money in the form of tax savings if deductions are correctly assessed and included in an investor’s tax return.
“By utilising tax depreciation, rentvestors may be able to work towards expanding their property portfolios or purchasing their dream home sooner than they thought was possible,” said Bradley Beer.
BMT has a free online calculator that interested rentvestors can use to estimate the likely depreciation deductions claimable from their investment property.