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Property Tax Depreciation: What You Need to Know

14 March 2023

Renee Edwards

Australian tax law can be complex, but understanding property tax depreciation doesn't have to be overwhelming. This blog post breaks down the basics of property tax depreciation and how it affects your financial situation. By the time you get to the end of this post, you should have a firm grasp on the fundamentals of property tax depreciation and how it relates to you. Scroll down to find out more.

What is Property Tax Depreciation?

Property tax depreciation allows investors to claim deductions for the decline in the value of their investment property over time. This decline in value is known as the 'depreciable amount' and must be calculated separately for each asset in the property. Claiming deductions due to property tax depreciation can result in significant savings on taxes for investors with rental properties.

Who Is Eligible For Property Tax Depreciation?

All owners of rental properties are eligible for claiming deductions due to property tax depreciation. This includes investors who own residential, commercial, or industrial rental properties that are used either partially or wholly as income-producing investments. It also includes investors who own multiple properties across different locations within Australia. The only requirement is that they must have a valid Tax File Number (TFN).

How Does Property Tax Depreciation Work?

After calculating the depreciable amount for each asset in an investment property, taxpayers can use this information when lodging their annual income tax returns to claim deductions from their taxable income. The Australian Tax Office provides detailed information about what types of assets are eligible for claiming deductions due to property tax depreciation and how much can be claimed per item per year. However, you must remember that these claims need to be supported by accurate records and receipts from purchases made when acquiring the asset or making any repairs or maintenance work on them over time.

Summary

Hopefully, you now have a bit of a better understanding of what property tax depreciation means and why it matters financially for any investor with properties in Australia. Knowing what assets are eligible for deduction due to property tax depreciation as well as how much can be claimed per item per year, are essential steps towards ensuring that your financial situation is kept up-to-date according to current Australian taxation law standards. So don't forget — if you want to stay on top of your finances, make sure you get in touch with a tax accountant today.

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