Why tax deductions could be coming your way

The Australian Taxation Office allows owners of income-producing properties to claim deductions for the wear and tear that occurs as buildings get older and items within them wear out.

BMT Tax Depreciation has noted that all properties are unique, therefore holding different depreciation benefits.

While Jesse and Mel do have an edge over their fellow competitors when it comes to tax deductions with a whopping $3,679,300 in total depreciation, BMT CEO Bradley Beer said the field is close this year.

“Smart property investors will often make note of the depreciation potential of properties and use that data to help inform the offers they make,” he explained.

“While Jesse and Mel’s property holds the most total deductions, Mitch and Mark ($3.65 million) and Andy and Deb ($3.63 million) are hot on their heels.”

BMT’s assessment showed that Tess and Luke had the property with the lowest amount of tax deductions ($3.61 million) followed by El’ise and Matt ($3.62 million).

Jesse and Mel’s property is also ahead of the competition when looking at tax deductions more short-term.

Their townhouse has $138,055 in deductions claimable in the first year of ownership if the purpose is for an investment, with BMT noting that this would also be of interest to any investors looking to maximise the potential for returns.

The average Block property reportedly contains $131,721 in first year deductions.

“With many challenging real estate markets in Australia at present, cash flow will be a key objective for investors and this is where tax depreciation plays a large role,” Mr Beer offered.

He said regardless of whether buyers are looking to bid on the show or are looking at real estate markets across Australia, they “can make more informed decisions by understanding the depreciation values of properties and how those values will impact their cash flow”.