• Depreciation

 

As buildings get older and items within it wear out, they depreciate in value.

The Australian Taxation Office allows property investors to claim deductions relating to the building (Capital Works) and Plant and equipment items in it.  The owner of an income-producing investment property can claim depreciation;

this has the effect of reducing their taxable income, meaning they pay less tax.

 

• Capital Works

 

The capital works allowance is a deduction available for the structural element of a building including fixed 

irremovable assets; this is commonly referred to as the building write off.  Only some properties will qualify for this

allowance.  For residential buildings constructed after 16 September 1987 your accountant can claim 2.5 per cent

of its historical construction cost.

 

• Plant & Equipment

 

Refers to removable items in the investment property like carpet, hot water systems, blinds, light fittings

and many other items.

 

• PPOR or PPR

 

Principal place of residence.  Generally, a residence is your PPR if you live in it (with your personal belongings)

on a daily basis.  Other factors may be used to determine whether a residence is your PPR, such as:

 

• Where your family lives

 

• The extent of time you live in the residence

 

• The address you have your mail delivered to

 

• Whether utilities (e.g. electricity, gas & telephone) are connected to the dwelling and the account(s) are in your name

 

• If the address of the residence is recorded against your name on electoral roles .