In 2004 we bought a house in Ireland for €300,000; in 2009 we immigrated to Australia.
Since then we have tried to sell the property and have been renting it out when we could. The rent doesn’t cover the cost of the mortgage not to mind the other costs involved such as maintenance, insurance, property taxes etc.. Even if we could find a buyer we would have to sell at a massive loss.
Does this sound like you?
For the past 5 years we have been able to write off $13,000 a year against our taxable income due to property tax depreciation.
So how is this done?
First it is important to understand that the Australian Tax System is very different to the Irish system when it comes to investment properties, so if you are basing your knowledge on what you can claim or not on the Irish system you are most likely paying too much Tax.
What is property depreciation ?
The Australian Tax System acknowledges that buildings and their contents wear out over time and eventually need to be replaced, in order to make provision for this future replacement they allow the tax payer to write off a portion of the initial acquisition/construction cost over the life of the asset.
This is what is known as depreciation and is identical in principal to a company claiming depreciation on a motor ve