All types of income producing properties have substantial taxation benefits that an investor is entitled to claim as a tax credit and any property, which is either rented or used for income producing purposes, is eligible to be depreciated.

This is an important aspect of the costing for an investment property and should never be overlooked.

Depreciation can be substantial but will also vary according to the type of property and the age of it with some examples being shown in the following tables:

Property Type	Purchase Price	Year 1 Depreciation	Year 1-5 Cumulative Deprecation
1 B/R Apartment	$300,000	$9,200	$41,000
2 B/R Apartment	$400,000	$13,500	$62,000
Townhouse	$400,000	$10,800	$49,000
Residential House	$400,000	$9,700	$43,500

What this table shows is that particular property types, as a result of the nature of their build, achieve a higher rate of depreciation than other types as you can see from looking at how a 2 bedroom (BR) apartment is more maximized than a townhouse or house.

To maximise the tax benefit a particular property, you will require the services of a recognised property tax depreciation expert (otherwise known as a Quantity Surveyor) with specific construction costing skills and experience.

This will allow you to capture the depreciation on the plant and equipment within the property, the capital works including common areas (if applicable) and any renovations and improvements carried out to the property.

Other expenses that are usually claimable as a tax deduction for a rental property are:

• Advertising for tenants
• Bank charges
• Body corporate fees & charges
• Cleaning
• Council Rates
• Electricity & Gas
• Gardening and Lawn mowing
• In-house audio/video service charges
• Insurance (building, contents, landlords and public liability)
• Interest on Loans
• Land Tax
• Lease document expenses (preparation, registration and stamp duty)
• Legal expenses (excluding acquisition & borrowing costs)
• Mortgage discharge expenses
• Property agent’s fees and commission
• Pest control
• Registration
• Stamp duty
• Quantity Surveyors Fee’s
• Repairs & Maintenance
• Secretarial and bookeeping fees
• Servicing costs : for example a call out fee
• Stationary and postage
• Tax related expenses
• Telephone calls and rental
• Travel and car expenses (Rent collection, inspection and maintenance of property)
• Water charges

You would need to check with your taxation adviser to make sure that this applies to your individual circumstances but this list gives an idea of the expenses that may apply.

Information supplied by Aviate Group