Mark Hay
Depreciation Allowance

This Weeks Episode of Home in WA

Mark Hay



(08) 9225 7000

(08) 9225 7777

0418 953 742

28/118 Royal Street
East Perth WA 6004

Basically, the government has permitted property investors to depreciate their building at a rate of 2.5% for 40 years. Interestingly, buildings really don’t go down in value, where as a new car driven off the showroom floor loses instant value. Each and every year it costs more to replace the same bricks and mortar. Certainly fittings such as hot water systems, air conditioners, carpets etc, do have a restricted life. Consequently, they are depreciated on a much higher accelerated rate of depreciation and obviously will need replacing at some stage. A rule of thumb is, if you own a property that is 10 years or younger, you should by rights be claiming depreciation on your tax return each year.

In order to do so, you are simply required to have a quantity surveyor conduct a full building depreciation analysis report on your property, which can thereafter be used year in year out for the life of the property. This gives some great benefits, especially for high income earners using the book figure of depreciation to claw back some of their hard earned tax dollars. The good news is, if you have neglected to claim this rightful deduction, it is possible to pay (via your tax refund cheque) to recoup the cost of the report in the very first year. There are several firms offering this service on a typical apartment / house, with the fees ranging from approximately $400-$750 and this document is then reproduced and used each and every year at no further cost.

In summary, this is a very effective way of extracting more cash return from your valuable investment and it’s so simple to do!