Property Investment Tax Deductions

Learn about property investment tax deductions to maximise your returns when buying investment Property...

Claimable investment property tax is a critical element of any property investment due to the ability to improve the property investors return and provide an increased cashflow. There are numerous ways that property investors can increase the return of their property investment by taking into account simple property investment tax elements.

What property investment tax elements should an investor look out for?

 - Property Depreciation on the building and fixtures & fittings
- Structure of the property purchase
- Ownership of the property
- Negative gearing

How does depreciation create property investment tax benefits?

When buying a new property or any property that was built post 1985, the investor is able to claim depreciation of the building and its fittings. For an investor to maximise the property investment tax claim, buying a brand new property either recently completed or off the plan will allow the investor to claim the maximum allowable depreciation.

Depreciation allowances (Division 42 ITAA 1997) are available to property investors. The depreciation allowances are also available to owners of Plant. Plant is defined as per the attachment to Income Tax Ruling 2000/18, defining over 850 items that may be depreciable including carpets, air conditioning and light fittings.

How does the structure of the property investment contribute to the property tax claimable?

 When purchasing an investment property, the structure of the property ownership should be considered carefully as depending on the structure that is chosen, it can change the property investment tax deduction applicable.

What are the different types of Ownership of investment property?

- Own Name
- Joint Names
- Tenants in Common
- Company
- Discretionary Trust
- Unit Trust
- Self Managed Super Fund

Property investors missing out on property investment tax deductions claims

There are many property investors that are not claiming their applicable property investment tax benefits. The most common way that many miss out on property investment tax claims is the depreciation allowable on property investments. This depreciation that is claimable as a property investment tax deduction varies depending on age, size, use and construction date. To maximise the depreciation that can be claimed on an investment property, a property investor should obtain the services of a qualified quantity surveyor that can help them achieve the maximum property investment tax claimable. An in-depth knowledge of the Income Tax Assessment Act 1997 is required.

Property investment tax is an important element to consider for all property investors, whether they be purchasing sydney investment property, brisbane investment property or melbourne investment property.