A House Built Before 1987 Purchased for $350,500
The Numbers: Derek’s Investment Property
Type of Purchase
The previous owner undertook minor renovations on the property before Derek purchased it. As a result, he is able to claim depreciation on the renovations of the property. However, he can’t claim depreciation on any of the existing plant and equipment (Division 40) assets and can only claim capital works (Division 43) deductions on the renovations.
Without Depreciation vs With Depreciation Services
The following cost breakdown shows Derek’s cash position with and without depreciation in his seventh year of owning the property.
According to his Duo Tax depreciation schedule, Derek could claim $5,600 depreciation in his first year.
Derek’s numbers without a depreciation claim
Derek’s numbers with a depreciation claim of $5,600
Without depreciation, Derek would have to pay $40 out of his own pocket each week. However, by taking advantage of the Australian Tax Office’s tax breaks and making a depreciation claim, he started generating $11 each week – which is $40 more than before his depreciation claim.
This means that Duo Tax was able to save Derek a total of $2,072 in his first year of owning the investment property.
The great thing about his depreciation schedule is that it’s valid for up to 40 years! So, Derek can continue saving money each year, as long as he 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.