Learn as John Sage Developer sheds light on investment property depreciation, how it works, and its benefits.
Wear and tear are unavoidable when it comes to owning a property investment. Yet did you realize you might exploit the drop in value of your rental property to save money on the next tax return?
As an investor, John Sage Developer, an expert real estate agent, property investment depreciation can be the ticket to considerable savings. You can save thousands of dollars in taxes by understanding what qualifies and does not qualify for this tax break.
Learn as John Sage sheds light on investment property depreciation, how it works, and its benefits.
How does rental property depreciation work?
To begin, John Sage observes that the ATO mandates all residential buildings built beyond 1985 to have a quantity surveyor provide a depreciation plan for any rentals. They will be capable of inspecting your property. Also, they can review & record any relevant things and estimate the construction or asset costs you can anticipate to claim.
As previously stated, this depreciation schedule will be divided into two major categories: Capital Works Allowance and Plants and Equipment. Working with a qualified quantity surveyor helps guarantee that you take advantage of every potential tax benefit and don’t leave any money on the table.
According to John Sage, this report should cost around $400 and $750 to produce. Then, you can give this document to the accountant to assist you in claiming depreciation on your investment property as a deduction on your subsequent income tax return.
What are depreciation benefits for investors?
The most notable gain of property investment depreciation to you as an investor is its ability to assist in saving significantly on your upcoming (and later) income tax returns.
Like a rental property owner, here are just a few reasons that John Sage notes as to why you should use a depreciation schedule:
1. You can decrease your taxable income by doing the following: Property investment depreciation means deducting the wear and tear and loss in value of the rental property from your taxes. With a suitable schedule, you can lower the tax you must pay.
2. You can claim legitimate tax deductions for the investment property: the only legal option to claim the loss in value of the rental property’s structure is to use a depreciation schedule, which allows you to maximize your potential savings while protecting your rental returns.
3. You can pay less tax even if the property has been refurbished: By working with such a quantity surveyor, one can maximize your possible tax savings from property investment depreciation (even though the previous owner has restored the property).
Understanding how depreciation works for investment properties and what you may claim can help you save thousands of dollars in taxes. Working with a competent quantity surveyor can help you maximize your savings while ensuring you promptly and legally make the deductions.
The more you save in taxes, the more capital you have to work with to increase your investment real estate portfolio and potentially dig into your property’s value to secure your future rental property.
