A Depreciation schedule is a document that is prepared by a qualified person (usually a quantity surveyor) that advises how much depreciation (wear and tear costs based on the useful life of your structure) you can claim on your investment property. Depreciation often helps to reduce taxes significantly without the burden of cash outflow. If you do not have a depreciation schedule yet, we have the perfect solution!

This is one of the most confusing areas in taxation law, however it boils down to basics in most cases. For example, if you improve the value of the property by your activity (i.e. new paint), then it should be regarded as an improvement which is considered a capital allowance and may only be claimed over the useful life of the resulting ‘asset’.

However if you are simply bringing an aspect of the property back to its original value/ condition (i.e. fixing a hole in the wall) then this will be regarded as a repair and be immediately deductible in your tax return in the financial year the activity was completed or ready for use.  

The Australian Taxation Office (ATO) allows investors to offset the loss from investment properties against their income (i.e. PAYG). This strategy, known as negative gearing, if planned correctly can lead to bigger tax refunds, whilst also an increased asset value and financial portfolio.