Visual Evidence of Depreciation Benefits

No necessarily the last 29 properties i have purchased was for the land only someone else owns the building
Even the Sydney GPO building is owned by someone different from the land owner

 

I call my wife an asset. Unfortunately, the ATO won't let me depreciate her but they let me claim her as an expense .

 

She lets you invest , helps you make money ..sounds like a great asset to me!

 

BMT have this simple case study for a 70's unit on their website:

Old Apartment | Apartment Depreciation | BMT Tax Depreciation

 

Thats a fair observation when explained that way. One of the benefits of a QS deduction is that despite the deduction that hard asset can actually increase in value. Perhaps not in a linear manner along with its associated land. (A 40 year old building isnt always valueless as the system describes. That leaves a taxable CGT issue.

This is probably one of the arguments as to why a CGT tax was introduced. Sometimes by isolating the tax on rental income etc from CGT it can make iIP owners look like ********s. Thats what some in media portray. The reality is property investors have a hell of a contingent CGT tax debt just waiting for a sale to occur. Media ignores that part.

 

So lets use an example of a printing business. An income producing printing press is bad and the land you put it on (producing no rental income ?) is good.

Makes no sense at all. Land does not always appreciate. Useful land appreciates. Try buying farmland and the Council wont give a DA to allow a development.

 

I only buy land in towns or cities
I only buy land that has a existing building on it
I only invest in land where the tenant has invested from several hundred thousand dollars to millions of dollars in the building

At the moment my opinion is it is still better to buy land (most in capital cities ...and even in the cbd ) than buying the land with a building that depreciates.

The building has a finite life but what usually happens is the "best and highest use of the land" changes.

So to utilise the land to the best value the building is removed/demolished (even though there is still physical life left in the building

This is best demonstrated by looking at old historic photos in city central district. at spacings of say every 50yrs ...you can see the city change

The land seldom changes but the buildings do

 

I agree "many" property investors have a contingent CGT tax debt but many do not ...with thoughtful planning.