Property investment is about making money… depreciation is about saving it! Three ways to save money faster – with a few depreciation tips. An investment property is like any other investment: the goal is to generate a profit. In real estate, this is achieved through income (rent, for example) or through a profitable resale. The way in which a property is used has a significant impact on its value. Investors sometimes conduct studies to determine the best – and most profitable – use of a property.
Depreciation’s all about claiming the wear and tear in your investment property, from carpets and blinds, to ovens and fixtures. It’s a legal way to reduce your taxable income. And here are some tricks to help you along the way. When you’re buying things for your investment property -I always say you should abide by one simple rule.
A dollar today is worth more than a dollar tomorrow. So deduct items as quickly as possible. First up, individual items under $300 can be written off immediately. Even if your portion of an expensive item is under $300, you can still write it off.So let’s say the electric motor of a garage door with 10 units costs $2000. That means you’re portion is $200 – you can write it off immediately. More importantly, if you’re buying a microwave for your property, buy one for $295 as opposed to $305!
By doing so you can claim the whole lot in one go, rather than depreciating it at the Prime Cost rate of 10% per annum, which is only $30 in the first year. That’s an increase of close to 1000%!!Items valued between $300 and $1000 can also be claimed in the Low Value Method which attracts a 37.5% rate. » Read more: Tips to Get More Out Of Your Depreciation Claim
