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A villa in Tuscany... an apartment in Hong Kong... a condo in LA...
More and more Australians are investing in property overseas at the moment. But can you
still claim depreciation?
And yes, you can depreciate an overseas investment property... but there are a few key differences.
The first main difference is in regards to claiming the building allowance -- that's
the wear and tear on structural elements of the property like bricks and concrete.
With Australian properties you're entitled to claim 2.5% of these construction costs
per annum, as long as the property was built after July 1985.
The rate for overseas properties is the same -- but the date is different. Construction
of an overseas property must have commenced after 1992.
So if you want to maximum your deprecation benefits on an overseas property, look for
a newer property built in the last decade or two.
Internal items like carpets, ovens, lights and blinds -- can also be depreciated, as
you would with an Australian property. This is often referred to as plant and equipment.
A good place to start your research is on the ATO's website. You can download a publication
called Tax Smart Investing: What Australians Investing in Overseas property needs to know.
Like any property investing, you'll need to do your homework, research the local market,
find out about rental yields and occupancy rates. But the best thing is -- this can all
be done on-line these days.
The main barrier to depreciating an overseas property is working out the construction costs,
along with the expense of flying a quantity surveyor overseas.
Washington brown has a number of affiliations around the world. We regularly inspect properties
in London... New Zealand...I even did an inspection in Koh Samui, Thailand.
So there you have it. You can still invest in overseas property and reap the benefits
of the Australian Tax system's depreciation laws.
But remember, the property must have been build or renovated after 1992.