Anyone planning to get into property investing must know that they are entitled to deductions they can claim against their taxable income. Here in Australia, one type of tax deduction that property investors can claim is property depreciation.
Savvy investors know how important a depreciation schedule is in minimising their tax. But surprisingly, not all are taking advantage of it. Are you’re making the most out of your property investing strategy?
Industry experts say that only one out of five of the millions of residential property investors in the country is maximising the yearly depreciation deductions. This means that thousands of dollars are being unclaimed by investors every year — money they could have used to pay off their mortgage or buy other assets.
There are two types of property depreciation allowances you can claim, namely, depreciation on plant and equipment and depreciation on building allowance. To maximise the tax returns you can claim, you need to know which potential deductions deliver the biggest returns.
According to a Bradley Beer, CEO of a tax depreciation firm, ducted air conditioners, floating timber floors, and solar power systems give the biggest deductions. “In the first financial year alone, these three items could result in about $3400 in deductions for the owner,” he says.
(Read More: Make the most of property tax deductions)
Small Deductions Help
But it’s not just the biggest deductions that can help boost your tax savings. Smaller ones like smoke alarms, garbage bins, and exhaust fans can help you put more dollars into your savings fund. But if you want to maximise the tax money that you can get back, it helps if you work with accountants who have years of experience in making depreciation schedules.
If you want to win the property game, you need to understand and make the most out of investing strategies. Contact us now if you want to learn more about these strategies and how to build a smart property portfolio.