Case Study

A New Granny Flat Built By Owner for $130,000

By ordering a Duo Tax depreciation schedule and claiming depreciation on her newly built granny flat, Charlotte went from generating under $100 weekly income to generating over $100 weekly income.
Newly built properties, including granny flats, generally offer significant tax deductions, so she ended up saving $3,151 in her first year of owning the granny flat.
Here's how.
New Granny Flat Built By Owner for $130,000

The Numbers: Charlotte’s Granny Flat Property

Here are some figures regarding Charlotte’s investment property:

Type of Purchase

She builds a granny flat for $130,000 one year ago and rented it out immediately.

Rent

Her yearly rental amounted to $19,400 per year - which is a weekly rental of $370.

Expenses

The property’s expenses amounted to $12,323, covering her interest repayments, management fees, rates and maintenance.

Because Charlotte built a brand new granny flat, she can claim deductions for the depreciation on the property’s plant and equipment (Division 40 assets) and the property’s capital works (Division 43) deductions.

Without Depreciation vs With Depreciation Services

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

According to her Duo Tax depreciation schedule, Charlotte could claim $7,300 in depreciation in her first year.

Newly Built Granny Flat for $130,000

Charlotte’s numbers without a depreciation claim

Annual Rental Income
370 x 52 weeks
$19,400
Annual Property Expenses
$12,323
Net Income (Pre-tax)
Income minus expenses: $19,400 - $12,323
$6,917
Net Income With No Depreciation
$6,917
Tax Payable
Tax loss x tax rate: $6,917 x 37%
-$2,559
Annual Income from the Investment Property
Net income + tax refund: ($6,917) + -$2,559
$4,358
Weekly income
$84

Charlotte’s numbers with a depreciation claim of $7,300

Annual Rental Income
370 x 52 weeks
$19,400
Annual Property Expenses
$12,323
Net Income (Pre-tax)
Income minus expenses: $19,400 - $12,323
$6,917
Total Taxation Loss With Depreciation
Net income + depreciation: ($6,917) + ($7,300)
-$383
Tax Refund
Total Taxation Loss x Tax Rate: -$383 x 37%
$142
Annual Income from the Investment Property
Net Income + Tax refund: ($6,917) + ($142)
$7,509
Weekly income
$144
Difference of $60 per week / $3,151 per year

Without depreciation, Charlotte was only generating $84 of profit from her newly built granny flat. However, by taking advantage of the Australian Tax Office’s tax breaks and making a depreciation claim, she started generating $144 each week – which is $60 more than before her depreciation claim.

This means that Duo Tax saved Charlotte a total of $3,151 in her first year after building her granny flat. 

The great thing about her depreciation schedule is that it’s valid for up to 40 years! So, Charlotte 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 Charlotte’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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