Case Study

Brand New Office Purchased for $504,000

By ordering a Duo Tax depreciation schedule and claiming depreciation on his new office space, Noah could significantly increase his investment income and boost his cash flow position.
He ended up saving $5,587 in his first year of owning the property!
Here's how.
Brand New Office Purchased for $504,000

The Numbers: Noah’s Investment Property

Here are some figures regarding Noah’s investment property:

Type of Purchase

He purchased a small office space within a building complex for $504,000 two years ago and rented it out immediately.

Rent

His yearly rental amounted to $45,760 per year - which is a weekly rental of $880.

Expenses

The office space expenses amounted to $41,210, covering his interest repayments, management fees, rates and maintenance.

Commercial property owners can claim depreciation deductions for the building’s structure as well as any assets they own within their property. So Noah can claim depreciation on the plant and equipment (Division 40) assets that he owns and the offices’ capital works (Division 43) deductions

Without Depreciation vs With Depreciation Services

The following cost breakdown shows Noah’s cash position with and without depreciation in his second year of owning the office space. 

According to his Duo Tax depreciation schedule, Noah could claim $15,100 depreciation in his first year. 

A brand new office space purchased for $504,000

Noah’s numbers without a depreciation claim

Annual Rental Income
$880 x 52 weeks
$45,760
Annual Property Expenses
$41,210
Net Income (Pre-tax)
Income minus expenses: $45,760 - $41,210
$4,550
Net Income With No Depreciation
$4,550
Tax Payable
Tax loss x tax rate: $4,550 x 37%
$1,684
Annual Income from the Investment Property
Net income + tax refund: ($4,550) + $1,684
$2,867
Weekly income
$55

Noah’s numbers with a depreciation claim of $15,100

Annual Rental Income
$880 x 52 weeks
$45,760
Annual Property Expenses
$41,210
Net Income (Pre-tax)
Income minus expenses: $45,760 - $41,210
$4,550
Total Taxation Loss With Depreciation
Net income + depreciation: ($4,550) + ($15,100)
-$10,550
Tax Refund
Total Taxation Loss x Tax Rate: -$10,550 x 37%
$3,904
Annual Income from the Investment Property
Net Income + Tax refund: ($4,550) + ($3,904)
$8,454
Weekly income
$163
Difference of $107 per week / $5,587 per year

Without depreciation, Noah was only generating $55 of profit from his office space investment. However, by taking advantage of the Australian Tax Office’s tax breaks and making a depreciation claim, he started generating $163 each week – which is $107 more than before his depreciation claim.

This means that Duo Tax was able to save Noah a total of $5,587 in his second year of owning the office space. 

The great thing about his depreciation schedule is that it’s valid for up to 40 years! So, Noah can continue saving money each year, as long as he owns the office space.

Here’s How Much You Could Be Claiming

As you can see from Noah’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. 10-15 business days your report will be delivered to you and your accountant.
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