Buying property in Australia is an investment. Most people know this to be true. But what many people don’t realise is that buying property specifically for investment purposes can help alleviate financial pressures over time, more than they might have ever imagined.
Many people also don’t realize that investing in property is not just a question of paying out for the investment. Once you become an investment property owner, you will be in a position to claim depreciation on your rental property when you submit your annual tax returns. You could think of it as getting a little help from government on your journey towards wealth creation. If you do it right, this is exactly what it amounts to.
Armed with this knowledge, you will find that investing in property will provide you with additional financial security and will in fact help you to cope with financial stress. This makes property investment a much more attractive opportunity than many others investment types.
So how does it work?
You Can Claim Thousands of Dollars at Tax Time
It doesn’t make any difference how old, new, renovated or refurbished your investment property is, once you have an investment property, all types of property depreciation may be claimed as deductions at tax time.
For instance you can claim about 2.5 percent of the cost of construction under the building allowance – depending on the type of building and its age. As a property investor you can also claim depreciation on plant and equipment. Even “scrapping”, which involves the disposal and replacement of assets that are part of the investment property, can be part of tax depreciation.
The surprising part is that a large number of investors don’t claim property depreciation on their rental properties. Essentially this means that they are losing the chance to claim what could amount to thousands of Aus dollars. How about you?
Don’t Lose the Opportunity to Claim
If you are a property investor who has never claimed depreciation, you need to discuss this with your accountant – or with an accountant who has the relevant experience. Even if you have never claimed in the past you can still submit an amended tax return that claims depreciation that was legally due in previous years.
Of course you will need properly kept records and all the relevant data to be able to make these claims. But chances are you will have these already – which means that you are already in a position to use your investment property to help cope with financial stress.
Our Mortgage Options is a leading mortgage broker in the Campbelltown area and we can help you find your ideal investment property that will minimise your financial stress.