Tax depreciation (also known as property depreciation) is a legitimate deduction against assessable taxable income, generated by a residential or commercial investment property.

It works by allowing property investors to deduct a portion of the original costs of furniture and fittings and capital works (such as renovations) on their investment property each financial year, over the effective life of that item.

The Australian Taxation Office recognises that the value of capital assets gradually reduces over time as they approach the end of their effective life. These assets can be written off as a tax deduction – known as depreciation.

Different items within a rental property have different rates of depreciation based on the effective life of the item. Qualified inspectors have the expertise and knowledge to know which items are depreciable and how savings can be made.

To claim maximum tax benefits on an investment property the Australian Taxation Office (ATO) requires property investors to complete a fully compliant tax depreciation report.

For more information on tax tips with your investment property, ensure you speak to your professional Financial Planner.