05 Jun 2021

What is Depreciation, and How Can I Claim it Against My Tax?

In the business world, company owners are afforded tax loopholes and accounting strategies to shrink their tax bills. Depreciation is one of those tax strategies. It takes an investment to keep a company’s door open. There’s inventory, equipment, and raw materials to purchase, store, and use. Unsold inventory and equipment lose value over time. As they lose value, the Australian Taxation Office allows the business owner to claim the depreciation amount against their income. 

Real estate professionals can claim depreciation against their rental properties on their annual taxes. Among the items that depreciate is the building’s structure. Ovens, dishwashers, and carpets count as plant and equipment assets. To find out their exact depreciation value annually, you might need to obtain the services of a professional tax accountant. It’s important to be accurate. 

You can also receive a tax deduction against the purchase price and the cost of useful improvements you make to the property. Depreciation for the ATO is spread out over 40 years in most cases at a percentage of 2.5 annually. Depreciation reduces the earnings of real estate professionals, so you can claim it on your taxes.

Depreciation Conclusion

At Mortgage House, our clients include real estate investing professionals. Our focus is the financing side of the real estate business sector. We’re not tax specialists. We do have some knowledge of the art of depreciation and how it affects taxes, so we can at least guide you. To learn more about our financing products such as the business loan, give us a call.


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