Tax Q&A: Your Questions on Depreciation Returns, Answered
Q: I am looking at buying my first investment property this year, and a friend has advised me to purchase a unit instead of a house for better depreciation benefits. I don’t quite understand how this works: houses are bigger, therefore shouldn’t the depreciation returns be higher? I would love some advice before I invest, as I’m aiming to keep my cash flow position as strong as possible (ideally I want a neutral or positively geared investment).
Thanks, Dale
A: Residential investment properties are usually classified into four main types of building: residential houses, townhouses, apartments or units (low-rise and/or high-rise). All these do allow you to obtain different types of capital allowance deductions.
If you are claiming under Division 40 on the above brand-new properties, you are generally entitled to claim the following percentages of the construction costs as a capital allowance:
a. Residential houses: 5–10%
b. Townhouses: 5–15%
c. Units/apartments, low-rise: 5–15%
d. Units/apartments, high-rise: 10–20% Continue reading
Tax time is here – Are you paying too much tax ?
Do you own or have you bought an investment property in the past financial year?
Or… have you recently refurbished, altered or extended your investment property in the past financial year?
Or… do you own an investment property but have never claimed depreciation in the past?
Or… own any property including commercial, retail, industrial, residential, pubs, clubs, sporting – we are experts in them all.
If your answer is yes to any of these questions then you may very well be paying too much tax on your income if you don’t claim your depreciation deductions. Continue reading
