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Depreciation for Investment Property
Depreciation is a ‘paper loss’ which is often over-looked as a deduction.
There are 2 types of depreciation:
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(a) Division 43 depreciation, ie. building depreciation at 2.5% per year over 40 years (this also reduces the cost base of the property for CGT purposes although you’re still 50% ahead due to the 50% CGT discount), and
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(b) Division 40 depreciation, ie. depreciation on fixtures & fittings (eg. carpets, blinds, oven, hot water service, etc.).
Depreciation reports are usually prepared by a quantity surveyor, who may or may not inspect the property. The surveyor then draws up a detailed depreciation report that lists all depreciable items that usually depreciate at different rates. We recommend TDAQS, Duo Tax, Washington Brown or BMT Tax Depreciation.
We recommend any of the following:
More Information on Investment Property Tax Deductions
Here are some blog posts about tax deductions for rental properties, which you may find useful.
