One of the key advantages of property investment, as noted by John Sage, is depreciation—a powerful tool that can help investors save substantially on both current and future income tax returns.
Here’s why using a depreciation schedule is essential for rental property owners:
- Reduce taxable income: Depreciation allows you to deduct the natural wear and tear, as well as the loss in value of your rental property, from your taxable income. With a properly prepared schedule, you can significantly lower the tax you need to pay.
- Claim legitimate deductions: The only legal method to account for the declining value of a property’s structure is through a depreciation schedule. This ensures you maximize potential tax savings while safeguarding your rental income.
- Save even on refurbished properties: Even if a property has been renovated by a previous owner, a quantity surveyor can help identify all eligible deductions, ensuring you benefit from the full potential of property investment depreciation.
Using a depreciation schedule effectively can make a substantial difference to your investment returns, providing ongoing financial benefits and improved cash flow.