Case Study

A 10-Year-Old Apartment Purchased for $681,000

By ordering a Duo Tax depreciation schedule and claiming depreciation on her new property, Kelsey went from being in a significant negative cash flow position to a manageable negative cash flow position.
She saved $2,294 in her first year of owning the property!
Here's how.
A 10-Year-Old Apartment Purchased for $681,000

The Numbers: Kelsey’s Investment Property

Here are some figures regarding Kelsey’s investment property:

Type of Purchase

she purchased a 10-year-old apartment for $691,000 one year ago and rented it out immediately,

Rent

her yearly rental amounted to $28,600 per year - which is a weekly rental of $550,

Expenses

the property’s expenses amounted to $38,625, covering her interest repayments, management fees, rates and maintenance.

While Kelsey wasn’t able to claim deductions for the depreciation on the property’s existing plant and equipment (Division 40 assets), she was able to claim depreciation on the property’s capital works (Division 43) deductions.

Without Depreciation vs With Depreciation Services

The following cost breakdown shows Kelsey’s cash position with and without depreciation in her first year of owning the property. 

According to her Duo Tax depreciation schedule, Kelsey could claim $6,200 depreciation in her first year.

A ten-year-old apartment purchased for $681,000

Kelsey’s numbers without a depreciation claim

Annual Rental Income
$550 x 52 weeks
$28,600
Annual Property Expenses
$38,625
Net Income (Pre-tax)
Income minus expenses: $28,600 - $38,625
-$10,025
Total Taxation Loss With No Depreciation
-$10,025
Tax Refund
Tax loss x tax rate: -$10,025 x 37%
$3,709
Annual Costs of the Investment Property
Net income + tax refund: (-$10,025) + $3,709
-$6,316
Weekly loss
-$121

Kelsey’s numbers with a depreciation claim of $6,200

Annual Rental Income
$550 x 52 weeks
$28,600
Annual Property Expenses
$38,625
Net Income (Pre-tax)
Income minus expenses: $28,600 - $38,625
-$10,025
Total Taxation Loss With Depreciation
Net income + depreciation: (-$10,025) + ($6,200)
-$16,225
Tax Refund
Total Taxation Loss x Tax Rate: -$16,225 x 37%
$6,003
Annual Costs of the Investment Property
Net Income + Tax refund: (-$10,025) + ($6,003)
-$4,022
Weekly loss
-$77
Difference of $44 per week / $2,294 per year

Without depreciation, Kelsey had to pay $121 out of her own pocket each week. However, by taking advantage of the Australian Tax Office’s tax breaks and making a depreciation claim, Kelsey reduced that weekly payment by $44 per week. 

This means that Duo Tax was able to save Kelsey a total of $2,294 in her first year of owning the investment property. 

The great thing about her depreciation schedule is that it’s valid for up to 40 years! So, Kelsey can continue saving money each year, as long as she continues to own the property.

Here’s How Much You Could Be Claiming

As you can see from Kelsey’s scenario, tax depreciation schedules can make a significant difference in an investor’s cash flow each year.

However, if you’re still feeling unsure about committing to ordering a depreciation schedule, we have designed a tax depreciation calculator to help you estimate what you could potentially claim on tax depreciation.

This is an accounting tool designed to help estimate and calculate the declining value of capital works and plant and equipment assets and relies on accurate figures to present accurate estimations.
Rental Property Depreciation Calculator

Obtain your tax depreciation schedule in 3 easy steps.

Step 1
Qualify your Property
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Step 2
Order a Report
Order over the phone or via our online form and we will begin preparing your report.
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Step 3
Claim Maximum Deductions
Within approx. 5 business days your report will be delivered to you and your accountant.
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