Depreciation is nothing to be jumping up and down with joy...

Depreciation is nothing to be jumping up and down with joy over... it just acknowledges property upkeep.

Let's say you deduct your new $5,000 carpet over 5 years at 20%/annum (or at the rate of $1,000/annum).. so if your tax rate is 30 cents in the dollar you saved $1500 over the 5 years in taxes.

So you're ahead $1500 in tax savings over the 5 years .. but you forked out $5,000 for the carpets in the first place... and probably need to pay $6,000 now for the new carpet (given inflation rate)... so you're still at least $3,500 worse off - because carpets do wear.

Carpets are just one of the expense items -

For a residential Property investor .. apart from rates has carpets, fences, spouting, plumbing, ducted heating, hot water system, repainting .. not to mention possible re-stumping, re-wiring, re-plumbing, kitchen and bathroom renewing, management fees, stamp duty etc.. etc..

A 3% net return would be welcome- so if you've borrowed at 8% is it any wonder that 70% are losing money ?