How does depreciation effect capital gains tax(CGT)?

You are completely entitled to claim all deductions and CGT rulings remain the same. You will however be required toadd your depreciation deductions to your capital gain when and if you decide to sell your investment. Capital Gains Tax is only levied on half the gain so half your depreciation deductions are not subject to inclusion in the calculation.

. Also the ATO can deem that you have received depreciation allowances whetheryou actually claimed and received them or not. You must remember that the additional cashflow from your depreciation is likely to befar more useful up front than not having it at all.

It can be utilised for additional repayments, adding value to your asset or as a buffer for vacancy. If you consider the indexing value, the dollars are actually worth far more to you now than years down the track. We are happy to provide further advice on this subject.

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