The benefits of Depreciation in the rental real estate business

The benefits of Depreciation in the rental real estate business

In Tom Wheelwright’s training course, he explains the three steps on how you can benefit from depreciation.

First, you don’t immediately jump to the depreciation step. Instead, you do a few other steps first to make sure the tax benefits of depreciation are maximized.

How much tax do you pay?

If your tax liability is already low, then the immediate focus needs to shift from reducing taxes to building wealth – this is where your resources will have the most impact. If you are like most, a good portion of your hard-earned money is going to taxes so reducing your taxes is often going to be the fastest way to put cash in your pocket to build your wealth.

Are you able to take all of your rental losses against your other income?
In Australia, the ability to take rental losses against other income depends on specific facts and circumstances.
If you are not able to claim all of your rental losses against your other income, your immediate focus needs to be on fixing this. If you can fix this, it can result in big tax savings.
Once you are able to claim your rental losses against your other income, it’s on to #3 – this is where the magic of depreciation happens!

Washington Brown, the Depreciation Company here in Australia has put up a vigorous campaign to educate investors on the importance of carrying out Deprecation on rental properties.

What Property Investors Need To Know  – Referral Partner Sampler for discounts available on request!

Are you maximizing your depreciation?

These happen to be the two worst classifications when it comes to depreciation. Most rental properties have many more components than this. This concept of identifying the different components is known as cost segregation. Even though the total depreciation over the lifetime of the property will be the same, by taking the depreciation sooner, the tax savings occur sooner which means more cash in your pocket now to build your wealth faster.

A big deduction doesn’t always result in big tax savings. These 2 steps identify the key factors to make sure the magic of depreciation in your rental real estate is maximized.

Want to know how Depreciation expert can increase your tax returns? Give us a call or request a quotation at the right top of this site.


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