Years ago, strata properties bore the stigma of being simply overcrowded, mass-produced unit blocks. How times have changed. Duplexes, townhouses and units with the same floor space of small houses are just some of the strata properties built and sold today, and they are in more demand than ever.
Strata properties offer many drawcards for investors. The entry costs are usually lower than those of a freestanding house, the maintenance is minimal, and they can attract a wide variety of tenants.
If your rent roll includes strata property landlords, there is a key thing they can do to put more money back in their pockets – claim depreciation.
How does depreciation make a difference?
Depreciation is the natural wear and tear of a property and its assets over time. For example, we all know a brand-new car drops in value as soon as you drive it out of the dealership. Well, the same happens to property.
Your landlord clients can claim depreciation for up to forty years on their investment properties. This reduces their taxable income, so they pay less tax.
When an investor rents out a strata property, like a unit, they can claim depreciation on the eligible assets within the unit and its structural component. They also hold the added benefit of claiming ‘common property depreciation’ on the eligible shared assets in the strata complex.
How does common property depreciation work?
Common property depreciation works based on the landlord’s ‘unit ownership’ percentage of the property.
For example, if a landlord’s ownership percentage was 10 per cent of the block and the building’s elevator had a value of $20,000, the landlord would be entitled to claim depreciation of $2,000 on the elevator (10 per cent of $20,000).
Start helping your strata landlords claim more
Too many investors are missing out on claiming property depreciation. You can ensure your landlords don’t become part of this group by educating them on the benefits of claiming property depreciation.
BMT Tax Depreciation are here to help you do this. BMT offers free services, like New to Rent, that automatically provide free depreciation estimates for any property on your rent roll. To learn more about depreciation and how BMT partners with you, contact the team on 1300 728 726 or visit their real estate professionals webpage.
BMT Tax Depreciation is Australia’s leading supplier of residential and commercial tax depreciation schedules.
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.