{"id":7062,"date":"2016-02-21T01:00:13","date_gmt":"2016-02-20T14:00:13","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=7062"},"modified":"2016-02-21T01:00:13","modified_gmt":"2016-02-20T14:00:13","slug":"readers-questions-claiming-depreciation","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/readers-questions-claiming-depreciation\/","title":{"rendered":"Readers' Questions: Will claiming depreciation on an investment house lower the value of the house in the ATO\u2019s eyes?"},"content":{"rendered":"

 
\nIn today’s show we answer a question from Wayne. He asks\u00a0Brad Beer<\/a>,\u00a0<\/strong>from BMT Tax Depreciation,\u00a0if claiming depreciation on an investment property will lower the value of the house in the eyes of the ATO.
\n <\/p>\n

Transcript:<\/strong><\/h4>\n

Kevin:\u00a0 <\/b>We\u2019re going to answer a question now that came in from Wayne Mundy from Toowoomba. Thanks for the question, too, Wayne. Joining me to answer is Brad Beer from BMT Tax Depreciation.
\nGood day, Brad.
\nBrad:<\/b>\u00a0 Hi, Kevin.
\nKevin:<\/b>\u00a0 Good to be talking to you again. I\u2019ll just quickly read Wayne\u2019s e-mail. \u201cI\u2019m only just starting out in my real estate journey and have heaps of questions, but one main one that I have is will claiming depreciation on an investment house lower the value of the house in the ATO\u2019s eyes and is there an increase in capital gains tax when it\u2019s sold? I\u2019d appreciate your insight into this matter.\u201d
\nWhat have you got to say about that one, mate?
\nBrad:\u00a0<\/b> Firstly, Wayne is reading and learning a lot, which is really impressive. That\u2019s great. If you\u2019re starting out in your real estate and investing journey, it\u2019s always good to do that. The depreciation that you do claim, yes, has an impact on some of the capital gains tax you do pay at the end. Capital gains tax is a tax you pay if you sell at some point and the claims that you make on some of the depreciation will have some effect on how much capital gains tax you do pay.
\nThe thing is that when you make depreciation claims or claims against the capital allowances on your property on the way through owning it, you get to put the cash in your pocket straight away and you get to make those deductions at your full marginal rate.
\nIf or when you do actually sell the property, yes, you\u2019ll pay capital gains tax and it will be an increased capital gains tax based on some of those claims, but you\u2019ll pay capital gains tax at half of your marginal tax rate at the time when you sell the property.
\nThe thing that really happens when you do calculate those two numbers is that you end up paying some additional capital gains tax but it\u2019s less than deductions in the money that you probably put in your pocket otherwise really normally.
\nI\u2019ve run some case studies on that in the past \u2013 probably good to get on it and read or I can provide that if you ever want them \u2013 on what happens if I am in this situation, what do the numbers look like? Your numbers will be different to the case studies, but you get an understanding of what the numbers do mean and exactly how the numbers are calculated by having a look at some case studies. Absolutely.
\nKevin:\u00a0 <\/b>Brad, if anyone listening wants to get hold of those case studies, how can they contact you or how can they access those?
\nBrad:\u00a0<\/b> Look, in our Maverick newsletter on the web site, they\u2019ll be available. If not, feel free to e-mail myself or the office at bmtqs.com.au, and we\u2019ll be happy to oblige.
\nKevin:\u00a0<\/b> Wonderful. Are you noticing, Brad, that more and more people are staring to understand the depreciation message and doing depreciation schedules on their properties?
\nBrad:<\/b>\u00a0 It\u2019s almost like our whole business is almost an education business for investors on depreciation. I actually spend more time educating than anything else about what depreciation means and what the numbers are.
\nI think depreciation is an important part of investing. It\u2019s not the reason you buy certain properties, but it is something you need to understand. It really comes down to you should crunch your numbers on properties before you buy them. You should know what will it cost pre- and post-tax for me to own this particular property? What does it mean for me to have it?
\nAlso, understanding some of the implications when you do sell a property of what the capital gains tax implications are is a good thing to do. So any number crunching and knowledge you have before you invest in a property is fantastic, and I\u2019m glad to see that\u2019s happening.
\nI\u2019m still shocked all the time by the amount of investors I speak to who probably don\u2019t understand the necessities of things like depreciation on the way through, but yes, definitely in my 17 years, they\u2019re way better than they were when I started.
\nKevin:\u00a0<\/b> Indeed. There\u2019s a lot more information, too, about Brad and his team at BMT Tax Depreciation on our web site, RealEstateTalk.com.au. Just click on the link there, you\u2019ll see all that information.
\nWayne, thank you very much for your e-mail. We\u2019re going to make you the e-mail question of the week and as such, you\u2019re going to win a 12-month subscription to Australian Property Investor<\/i> magazine. I\u2019ll be in touch with you and we\u2019ll get your details and make sure that you\u2019re in line to give the next one.
\nBy the way, too, if your question is chosen, as was Wayne\u2019s, and you are already a subscriber to API,<\/i> don\u2019t worry. We will extend your existing subscription by a further 12 months with our compliments and with the compliments of Australian Property Investor<\/i> magazine.
\nWayne, I\u2019ll be in touch and it will be on its way to you.
\nBrad, always great talking to you, mate. Thank you very much, and we\u2019ll catch you again soon.
\nBrad:\u00a0<\/b> Excellent. Thanks Kevin.<\/p>\n","protected":false},"excerpt":{"rendered":"

  In today’s show we answer a question from Wayne. He asks\u00a0Brad Beer,\u00a0from BMT Tax Depreciation,\u00a0if claiming depreciation on an investment property will lower the value of the house in the eyes of the ATO.   Transcript: Kevin:\u00a0 We\u2019re going to answer a question now…<\/p>\n","protected":false},"author":176692471,"featured_media":7065,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[34,10,11,13,17,25],"tags":[64,80,101],"class_list":["post-7062","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance-topic","category-kevin-turner-sponsored-channels","category-kevin-update","category-latest-story","category-property-investment","category-sponsored-channels","tag-depreciation","tag-investment-property","tag-podcast"],"yoast_head":"\nReaders' Questions: Will claiming depreciation on an investment house lower the value of the house in the ATO\u2019s eyes? - Realty Talk<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/channels.realty.com.au\/realtytalk\/readers-questions-claiming-depreciation\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Readers' Questions: Will claiming depreciation on an investment house lower the value of the house in the ATO\u2019s eyes? - Realty Talk\" \/>\n<meta property=\"og:description\" content=\"  In today’s show we answer a question from Wayne. 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