Property Investors fail to claim Depreciation Deductions

by | Sep 13, 2021

BMT still finding an average of $8,940 in depreciation deductions

Many of Australia’s property investors are still missing out on thousands of dollars in tax deductions each year by failing to maximise or claim depreciation for their investments. While changes to depreciation legislation introduced in 2017 have impacted some, there are still thousands of dollars available to be claimed by property investors.

Despite the changes, BMT Tax Depreciation are still finding owners of residential investment properties an average of $8,940 in first full financial year depreciation deductions.

What can be depreciated?

Depreciation can be claimed as a tax deduction on the natural wear and tear of property and assets over time. Only owners of income-producing properties can claim it and it holds the potential to boost cash by thousands over the lifetime of the property.

Depreciation can be claimed under two categories:

The first is capital works. This is the depreciation of a property’s structure and fixed assets like walls, door handles, basins, toilets and fixed cabinetry. These deductions make up 85-90 per cent of total depreciation claims.

The second category is plant and equipment. This can be claimed on the easily removable and mechanical assets such as hot water systems, air-conditioning units, floor coverings and light fixtures.

To claim depreciation, an investor needs a tax depreciation schedule. This outlines all depreciation deductions available for the lifetime of the property (up to forty years).

What does claiming depreciation do to an investor’s cash flow?

Depreciation ultimately reduces an investor’s taxable income, meaning they pay less tax and end up with more cash in their back pocket.

For example, if an investor’s gross taxable income was $90,000 and their tax rate was 37 per cent, they would have to pay a total of $33,300 in tax. But if they claimed $9,000 in depreciation deductions their taxable income would reduce to $81,000 and the amount of tax they pay would reduce to $29,970. This is an annual tax saving of over $3,000.

Better still, depreciation is a non-cash deduction, so the investor didn’t need to spend a cent to make this saving.

How does BMT find an average deduction of almost $9,000?

$9,000 is a significant amount for a non-cash deduction, but how does BMT find such a high average with the strict depreciation rules enforced by the Australian Taxation Office?

The answer is in BMT’s comprehensive approach. BMT runs all of its operations in-house and therefore has oversight of the process end-to-end. They also have their own site inspection team that physically attend a property to ensure no stone is left unturned when preparing the schedule.

Still unsure if claiming depreciation will be worthwhile?

BMT Tax Depreciation is Australia’s leading supplier of tax depreciation schedules. The interest of their clients is always front-of-mind and they provide obligation-free depreciation estimates.For further peace of mind, BMT guarantee to find double their fee in first full year deductions or there will be no charge for their services. So there’s really nothing to lose just by asking the question. To learn more about depreciation and how BMT can help you maximise to return from your investment property, call 1300 728 726 or Request a Quote.

BMT Tax Depreciation is Australia’s leading supplier of residential and commercial tax depreciation schedules.

Bradley Beer (B. Con. Mgt, AAIQS, MRICS, AVAA) is the Chief Executive Officer of BMT Tax Depreciation.  Please contact 1300 728 726 or visit bmtqs.com.au for Australia-wide service.


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Chan & Naylor
Chan & Naylor

Chan & Naylor is Australia’s leading property, business, tax-accounting & wealth advisory group with offices nationwide.

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