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Depreciating assets are the business assets that can be expected to decline in value over the life of the asset. It has a limited effective life. You begin depreciating an asset when it is ready and available for use. You can claim depreciation for equipment and some other tangible assets such as – buildings, machinery, vehicles, computers, furniture and fixtures. You can also depreciate most intangible property like - patents, copyrights and computer software.

“Capital Gains Tax” (CGT) takes place when you gain capital by selling some assets. It seems complicated for property investors when a CGT exemption is available. CGT exemptions include:

  • The place where you reside or occupy or live in as your home and the land of that property is not more than 2 hectares. This is commonly known as principle place of residence (PPOR);
  • The car, motorcycle or similar vehicle that is designed to carry a load of less than 1 ton and fewer than 9 passengers;
  • Pre-CGT shares in private companies or in a private trust acquired before 20 September 1985;
  • The property that is in your name for more than 12 months from the date of contract signing;
  • Acquired items for personal use which is no more than $10,000 and collectables;
  • Depreciating assets that is solely used for non-taxable purposes and trading stock; 
  • If you moved out of the property and rented it out, then you can claim an exemption for
    up to 6 years after you moved out.

When you apply for an exemption, your capital gains will be included in your assessable income for that year. A capital loss will not reduce your assessable income. Rather, you may able to offset the loss against a capital gain in the current or future financial years.

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