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Many investors are unaware that if you own an investment property, you are able to claim certain depreciation allowances on your property.

Many investors are unaware that if you own an investment property, you are able to claim certain depreciation allowances on your property. 

It is also a non-cash claim, meaning you do not have to spend money to make a claim.

What is Property Depreciation?
Items on your investment property may be subject to wear and tear and these items can be claimed against your taxable income. There are two different types of depreciation allowances available: building and plant/equipment.

Building allowances may include construction costs of the actual building such as:

• Brickwork
• Driveways
• Fences
• Doors and windows
• Garages

Plant/equipment refers to removable items such as:

• Carpets, flooring
• Air conditioning and heating units
• Ovens
• Blinds, curtains
• Security systems

How do you make a claim?
If you do make a depreciation claim, the ATO requires evidence. Therefore, you will need to contact a trained Quantity Surveyor to inspect your property. They will make sure that all depreciable items are photographed so you will have everything documented.

Then, your accountant can use this information when they are organizing your tax return every year.

What are the benefits?
By claiming depreciation on your property, it will reduce the amount of tax you have to pay. According to the Australian Cost Planners Pty Ltd, the amount of depreciation that can be claimed on a residential property could be between $1,500 and $15,000 a year.

However, you will need to check when your property was built. If it was built after July 1985, you are eligible to claim both building and plant/equipment. If construction began before July 1985, you will only be able to claim plant/equipment allowances. But it will still be worth claiming these allowances.

Property tax depreciation gives investors the opportunity to save money on the general wear and tear of their property.