Find hidden deduction opportunities in your investment property

Investment properties hold a wealth of tax deductions, but many of these can go unnoticed if you’re not paying close attention. Hidden deductions can make a significant difference to your net rental position, adding up to tens of thousands of dollars over the lifespan of your property.

That’s where a Quantity Surveyor report, also known as a Tax Depreciation report, can help. A Tax Depreciation enables an investment property owner to claim valuable tax deductions in relation to property depreciation. Property depreciation is the natural wear and tear that happens to a property and its assets over time and is the second largest tax deduction available to property investors, after loan mortgage interest.

In this article, we explore five hidden deductions in investment properties, which you could be claiming depreciation for over its useful life:

1. Underfloor heating - This one often slips through the cracks, but it can actually yield deductions of up to $10,000 for an average-sized house.
2. Re-stumping a home - If you have an older property, you might need to reset or replace the stumps supporting the subfloor. This is where re-stumping comes in. It's a common requirement due to damaged wood or soil movement. By claiming depreciation deductions starting from around $13,000, you can significantly reduce your taxable income.
3. Re-wiring and re-plumbing - Older or damaged properties often require some work on the electrical and plumbing systems. These improvements can generate a total depreciation deduction of approximately $16,000. Even if the previous owner completed these upgrades, you can still claim them.
4. Solar pool heating - Don't forget to check if your investment property has solar pool heating. It's easy to miss since it's usually hidden away on the roof. But by recognising and claiming depreciation deductions of around $7,000, you can lower your tax burden and enjoy the benefits of an energy-efficient pool.
5. Sewage treatment assets and tanks - If you have a rural property, chances are you have your own sewage treatment assets and tanks. These are often hidden from view, underground. But, they can result in a depreciation deduction of around $11,500.

Nearly every aspect of your property is depreciable, however, accurately determining the maximum amount of depreciation requires a thorough physical site inspection. That's where a Quantity Surveyor assists.

If you would like to learn more about the tax benefits of claiming depreciation for your investment property, please contact the advisors team at LINK and we can assist.