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A beginner’s guide to depreciation

By Emma Smith

BMT Tax Depreciation shows how investors can claim all they are entitled to when it comes to depreciation on their properties.

Property depreciation is a complex topic for investors, with many failing to take full advantage of the depreciation deductions they are entitled to.

Depreciation is the natural wear and tear that occurs to a building and the assets within it over time.

The Australian Taxation Office allows owners of income producing properties to claim depreciation as a deduction.

The two categories of depreciation are division 43 capital works allowance and division 40 plant and equipment.

Capital works allowance deductions relates to the depreciation of the structure and permanently fixed assets of a property. Capital works include assets such as the walls, driveway and doors.

Any residential building where construction commenced after the 15th of September 1987 will allow their owner to claim capital works deductions at a rate of 2.5 per cent for up to forty years.

If the property was constructed prior to these dates, any capital works renovations can be claimed as deductions.

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