Data shows that Australian property investors often make one large and costly mistake, according to Australia’s leading supplier of tax depreciation schedules.

BMT Tax Depreciation recently analysed their investor database and were surprised to find that a great deal of property investors overlook depreciation, a particularly lucrative tax deduction.

“In the last three years, more than 25,000 people who have come to BMT for a tax depreciation schedule have been missing out on claiming any depreciation in previous financial years,” Bradley Beer, BMT Chief Executive Officer revealed.

Depreciation is the natural wear and tear of property and assets over time. It is the second-largest tax deduction available for investment property owners after loan interest, yet Bradley Beer says the company has seen tens of thousands of investors neglecting to claim depreciation to its full potential.

“Property depreciation isn’t the same as other tax deductions. Investors don’t need to spend any cash to claim it, which is why it’s easily missed. And people don’t realise it can be claimed for up to forty years,” explains Mr Beer.

“If an investor buys a new 4-bedroom house for $750,000, they could expect a first-year deduction of over $16,000, while the cumulative five-year deductions would be around $67,500.”

Mr Beer continued to explain that it’s not just the large, expensive investment properties that result in thousands in depreciation deductions.

“A second-hand, 2-bedroom unit purchased for $550,000 can still result in a first-year depreciation deduction of over $6,500 and cumulative five-year deductions of over $27,000.”

Mr Beer said that investors who have not been claiming depreciation could still claw back some missed dollars.

“It’s quite straight forward to amend two previous years’ tax returns with our schedules, but anything beyond this can get complex and come under tax commissioner scrutiny. So, it’s best to get on top of it early,” said Mr Beer.

“Claiming depreciation can be the difference between a negative and positive cash flow. We see it help investors build equity and grow their portfolios throughout their investing journey,” he concluded.

The views expressed in this article are an opinion only and readers should rely on their independent advice in relation to such matters. 

This is a sponsored feature article. 

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