Depreciation: A Complex Ally of Property Investors

In the world of property investors where saving even a penny is termed as an achievement, depreciation is undeniably seen as a crucial component of a property’s profitability. But the nature of depreciation is very complicated for any investor to decipher, which makes it a thing, irrespective of its virtues, so ignored along with its impact of shelling out many thousands of Australian Dollars in potential tax deductions. Read on to know depreciation in a better way.

 

A Closer Look at Depreciation

As an investment property ages, the items in it regress towards wear and tear along with the entire property. This is what makes the value of the property decline. Here, it is to be noted that the decline in the value of the property is going to keep up with the pace of the property’s age. In short, the older the property, the more the decline in its value will be. It is sort of inevitable and irreversible. The Australian Taxation Office (ATO) is au courant with this fact. In order to make up for this loss of value, the ATO allows the property investors to make a claim in the form of tax deduction against their assessable income. This is known as depreciation.

 

Know Depreciation; Know a Way to Save Money

Depreciations are an intangible benefit because they are non-cash deductions. These deductions are integrated with your investment property. Hence, all you need to do is claim rental property depreciation in order to not to miss out on your entitlement. The ATO is not going to make you realise it without your claim. It is not going to issue reminders as well. It is you who have to make a claim so as to enjoy its benefits. One of the most acknowledged benefits of depreciation is the improvement of cash flow by minimising the base of taxable income. However, it should not be seen as the compelling reason to take up property investment. But its value should not be overlooked especially when, on claiming it rightly, it is bound to make you reap benefits including making your property investment better to manage and saving more for further investment chances.

Worth of Depreciation

Calculating depreciation for assets or for property is tougher than what it seems. But once it is done with the aid of an expert, the amount of depreciation can be straightaway offset from the assessable income of the property investor. This would mean reduced tax liability and improved cash flow. This brings us to the main theme of this article that indeed, depreciation is important, but it is complicated to understand. The complexity of calculating and claiming depreciation has only grown manifold over a period of time. Besides, the rules are different for different types of buildings. So, it is advised to seek help from qualified specialists such as Write It Off that work in concordance with the ATO. Such professionals, as recognized by the ATO, are capable to complete even the property depreciation report. And they can produce property depreciation schedule after construction is complete. Make such experts your partner!