Friday, March 11, 2011

Unlock the Hidden Cashflow in Your Investment Property

There is one particular deduction that time and again goes unnoticed or overlooked—depreciation on the building itself. Yet this deduction can be used to reduce debt and save you interest costs on your investment loan or even be put into expanding your property portfolio. So it’s worth looking into.

In order to prepare the paperwork for this you need to contact a Quantity Surveyor who will assess the property and give your accountant all the relevant details. The assessment, itself, is tax deductible and needs to be done only once, while the deduction goes on for years.

What most people do deduct in the way of depreciation are items they actually replace such as a new hot water service or refrigerator. But, oddly enough, the item with the most value they forget—the building itself.

The capital outlay on an investment property normally has three components: the land, the building and the plant and equipment. Each of these items is treated separately from a depreciation perspective.

The good thing about the building depreciation deduction is that it can be immediately claimed against capital outlay subject to the date of construction. The land value and landscaping, however, do not figure in this calculation and are not depreciable.

You can claim the Building Write Allowance on residential dwellings constructed after 18 July 1985. You can also claim the same for non-residential buildings constructed after 20 July 1982. Talk to your accountant for further details.

If you have a question about real estate, or would like assistance in locating or selling a property, feel free to phone me, Noel Thompson Principal Professionals Logan Lifestyles at either Browns Plains 3800 4000, Marsden 3200 4495 or Springwood 3808 5544.