You've done the hard yards searching for your perfect investment property. You've scoured inner-west Melbourne, finally found the perfect investment property in Kensington, and bought it! After the dust has settled, you've found a local Kensington property manager, and your new tenants have moved in. Now, you're looking to ensure you get the most from your new investment property.  
Would you be surprised to learn that you could save money on your next tax return by using your rental property's decline in value?  
Wear and tear are part and parcel of owning and managing an investment property. Just as you can claim the wear and tear on a car (bought for income purposes), you can claim the depreciation of an investment property against taxable income. 
It is a well-known fact among experienced property investors that investment property depreciation has the potential for significant savings. However, with the possibility of claiming thousands of dollars in tax deductions, knowing what does and does not fall under this tax concession category is crucial.   
So let's get started with the basics!
An investment property depreciation can allow property investors to claim back some of the decline in value of their investment properties on their next tax return.   
How do these claims work? There are two areas of a rental property where property investors can claim tax deductions; a decrease in the value of the building and a decreases in the value of the permanent fixtures.  
So what is an investment and rental property depreciation? 
An investment property's depreciation is the decline in value of its 'plant and equipment assets' (such as ovens, dishwashers, curtains, and carpets). When it comes to investment property deductions, there are a few things to keep in mind as an investor. As a first step, claiming these items can potentially lower your income tax bill.   
In addition, these expenses are known as "non-cash deductions". This means that you won't have to pay for these expenses on an ongoing basis. Instead, this depreciating asset can be claimed at the time of purchase and these deductions are built into the sale price of the property.  
In order to claim these deductions on your rental property, you'll need to hire a quantity surveyor who can prepare a document called a tax depreciation schedule. Using this schedule, you can track all of the investment property depreciation assets you intend to claim.  
A number of factors determine the cost of preparing this document, including the type of property you're buying and the size and location of the rental property. 
Read More: 
To Learn more about investment and rental property deprecation for Kensington, Melbourne Victoria visit The ATO’s Australian Residential Rental Properties Page.  
To find out more about house prices in Kensington learn more on our Kensington Property Price Guide Page. 
Wanting to learn more about Investment properties and managing income from investments in Melbourne Kensington? Check out our next article "What is rental yield? And how to calculate it” 
Are you looking for an investment property appraisal? Request an Appraisal For Your Kensington Property or find the right agent to help you along your property journey.