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Ask Christine - What sort of annual depreciation should I aim for?

Monday, 01st February 2016

<What sort of annual depreciation should I aim for? I've heard you need to be looking for about $8000-10,000, but what does that mean in an actual property?>

Deprecation is an expense that can be claimed on residential investments. Newer properties attract a higher rate of deprecation.

I come across a lot of investors who don't realise how much deprecation can give them back in a taxation return. Organise a deprecation schedule when you purchase, whatever the age of the property. You will be very surprised as to what $ dollar value you can claim (plus, most providers offer a money back guarantee if their assessment is incorrect).

But getting back to the $8,000 - $10,000… You are not just looking for the $ amount to claim in deprecation. To gain a tax deduction, you are able to claim such things as the bank interest on the investment property loan, property management fees, rates, maintenance and so much more.

This process is called 'gearing' and your accountant will explain this to you in more detail. It is based on your taxable income and your current tax rate. Basically the formula is income (rent) less expenses (as mentioned above) equals a tax rebate or tax payable.

Everyone's position different. If you'd like to know what a rebate would look like for you please contact me on 1300 736 754 and I will prepare a computer generated cash flow for you.