Generating Positive Cash Flow on a 10-Year-Old Townhouse
The Numbers: Taylor’s Investment Property
Type of Purchase
While property investors are no longer allowed to claim tax deductions for plant and equipment depreciation (Division 40 assets), Taylor leased out her property prior to the legislation changes in 2017, which means she can continue to claim depreciation over the useful life of these assets. She can also claim depreciation on the property’s capital works (Division 43) deductions.
Without Depreciation vs With Depreciation Services
The following cost breakdown shows Taylor’s cash flow position before and after she started claiming a tax deduction for her investment property’s depreciation.
According to her Duo Tax depreciation schedule, Taylor could claim $10,600 depreciation.
Taylor’s numbers without a depreciation claim
Taylor’s numbers with a depreciation claim of $10,600
Without her depreciation claim, Taylor had to pay $19 out of her own pocket each week. However, by taking advantage of the Australian Tax Office’s tax breaks and making a depreciation claim, she actually started generating income from the property for the first time since she owned it.
Duo Tax saved Taylor a total of $3,922 in her first year of turning her property into an investment.
The great thing about her depreciation schedule is that it’s valid for up to 40 years. Taylor can continue to save money each year as long as she continues to own the property.
Here’s How Much You Could Be Claiming
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.