In terms of depreciation, what should you consider when making an investment property purchase decision?
If you are looking to purchase an investment property, it is worthwhile asking yourself a number of questions. While many investors consider location, purchase price and tenanting ability when contemplating an investment property purchase, they often overlook depreciation as an important factor. Depreciation can help unlock the cash flow potential within an investment property, often meaning the investor will have thousands of additional dollars each financial year.
There are several factors for consideration that will enable the property owner to
maximise tax depreciation benefits including:
? The age of the property: Both new and older properties will attract some depreciation deductions, although a property with an age between 1-20 years will provide higher depreciation than an older property.
? The type of property: If the property is part of a strata complex or community title development, each unit is entitled to claim common property benefits in addition to the unit’s depreciation benefits.
? The amount of common property: Common property items within a strata or community title complex such as lifts and swimming pools are included in the depreciation report. The more common property there is, usually results in higher depreciation claims.
? The amount of plant and equipment: Plant and equipment are items that can easily be removed from the property as opposed to items that are permanently fixed to the structure. Plant and equipment includes items such as light shades, stoves, air conditioning systems, blinds and carpet. These items can be depreciated at a higher rate and add significantly to the depreciation claim. More plant and
equipment generally means higher depreciation claims.
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1 Becoming Depreciation Wise // Apr 18, 2008 at 11:04 am
[...] At the Heartland osvaldo Tournament Friday afternoon at Bill Greehey Arena on the St. wrote an interesting post today onHere’s a quick excerpt In terms of depreciation, what should you consider when making an investment property purchase decision? If you are looking to purchase an investment property, it is worthwhile asking yourself a number of questions. While many investors consider location, purchase price and tenanting ability when contemplating an investment property purchase, they often overlook depreciation as an important factor. Depreciation can help unlock the cash flow potential within an investment property, often meani [...]
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