Show notes – The Ultimate Guide to Property Depreciation – Maximise Your Investment Returns with Expert Advice on Tax Deductions (Ep. 282)

Episode Highlights

_{1.00 – Dave kicks off the episode, but before the Trio chat about depreciation, Dave puts a special call out to our listeners.}

_{5.50 – Can you backdate a depreciation claim?}

_{13.16 – Mike explains how depreciation is considered for Self Managed Superannuation Fund purchases}

_{14.55 – The inverse relationship between capital growth and depreciation}

_{19.07 – Next week’s teaser: It’s a thriller… regional investing}

_{30.15 – Repairs vs deductions}

_{34.39 – Gold Nuggets}

Show notes – Property Depreciation

Today’s episode is all about property depreciation, and we’re tapping into Mike’s expertise to unpack this powerful (yet often forgotten) tool for investors. Whether you’re a new property owner or a seasoned investor, understanding the ins and outs of a depreciation schedule can be a game-changer for your returns.

The episode kicks off with Dave asking the million-dollar question: “How often should I update or review my depreciation schedule to maximise my tax benefits?” Mike dives into the answer, explaining that a depreciation report can last the life of the property ownership. Still, if renovations or improvements are made, it’s worth revisiting with a quantity surveyor to ensure every eligible deduction is captured. He breaks down the role of the surveyor in estimating construction costs—a critical part of any accurate depreciation schedule.

Cate also shares a personal story, admitting to one of her early investment mistakes: overlooking the opportunity to arrange a depreciation schedule after a significant renovation. Mike explains the financial impact of missed deductions, highlighting just how much potential savings are left on the table across the country when investors skip depreciation.

Depreciation Schedules Made Easy
Curious about setting up your own depreciation schedule? Mike explains the process, from gathering the right documents to knowing when a physical inspection is necessary. He shares stories from the field, like his service station inspection experience—a cautionary tale for anyone thinking about cutting corners with professionals who skip in-person visits!

What About Self-Managed Super Funds?
Properties held in an SMSF come with their own unique depreciation rules. Mike breaks down how depreciation works for SMSF-owned properties and how tax rates influence the benefits, showing listeners the potential to make depreciation work even within superannuation strategies.

Depreciation vs. Capital Growth
High depreciation and high capital growth don’t always go hand in hand, and Mike illustrates this balance with a classic example: the one-bedroom high-rise apartment in Southbank. This case study sheds light on why investors should be wary of making property choices based solely on depreciation potential—reminding us that growth fundamentals are key to a successful long-term strategy.

Is There Value in a Depreciation Schedule for Older Properties?
For those holding properties over 40 years old, the question arises: is it worth arranging a depreciation schedule? Mike shares when it’s worth investigating (hint: recent renovations can reset the clock on depreciation), providing useful insights for investors with older assets.

Repairs vs. Depreciable Assets
The conversation wraps up with a breakdown of the difference between immediate repair deductions and assets that depreciate over time. Mike explains how to identify each type on a depreciation schedule, so listeners can ensure they’re not missing out on valuable deductions.

Gold Nuggets:

Cate Bakos’s gold nugget: Well-meaning advice from accountants to maximise tax deductions isn’t always great property advice. If in doubt, get a second opinion.

Mike Mortlock’s gold nugget: Don’t assume that it’s not worth getting a depreciation schedule. Always check!