Boost your bottom line: how claiming depreciation with BMT benefits investors

4 min read
Property depreciation is a valuable tax deduction which allows investors to make an annual claim for the gradual wear and tear of an income-producing property and its assets. By doing so, investors can significantly reduce their taxable income, resulting in substantial savings. Maximising these deductions enables investors to optimise cash flow and enhance overall profitability.

Often overlooked by investors, property depreciation is the second largest tax deduction after investment loan interest. It is a non-cash deduction, meaning investors don't have to spend money to claim it. To help investors claim maximised tax deductions, BMT Tax Depreciation prepare comprehensive tax depreciation schedules which outline all available deductions over the effective life of the property. 

Case study: a brand-new unit generates thousands in deductions
 
New unit purchased for $650,000 Without depreciation With depreciation
Pre-tax cash flow    
Annual income $31,200 $31,200
Annual expenses $42,400 $42,400
Total loss (before depreciation) $11,200 $11,200
Depreciation claim   $14,800
Total loss (tax deduction)   $26,000
Post-tax cash flow    
Tax refund (loss x 37% tax rate) $4,144 $9,620
Net cost to own property $7,056 year
$136 week
$1,580 year
$30 week

Prior to claiming depreciation, the owner incurred a cost of $136 per week to own the property. However, by claiming depreciation, this cost was significantly reduced to $30 per week, resulting in an improvement of $106 per week. This case study highlights the financial benefits associated with claiming depreciation and engaging the services of BMT Tax Depreciation to enhance cash flow.

Investors looking to maximise depreciation deductions should call BMT on 1300 728 726 or Request a Quote

Bradley Beer (B. Con. Mgt, AAIQS, MRICS, AVAA) is the Chief Executive Officer of BMT Tax Depreciation. Please contact 1300 728 726 or visit bmtqs.com.au for Australia-wide service.

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