Case Study

Reducing Negative Cash Flow on a Townhouse Built in the 1980s

Penelope purchased a property (originally built in the 1980s) in 2015 as her first investment, which she managed to rent out immediately. After a few years of being in a negative cash flow position, she sought advice as to how she could potentially improve her position. After hearing about how depreciation could potentially boost her cash return, she reached out to Duo Tax to order a depreciation schedule.
Thanks to the help of a quantity surveyor, Penelope was able to move from being in a significant negative cash flow position to a far more manageable one. In other words, while she still had to pay some out-of-pocket expenses, she significantly reduced the amount, saving $1,961 in her first year of claiming property tax depreciation!
Here's how.
A Townhouse Built in the 1980s

The Numbers: Penelope’s Investment Property

Here are some figures regarding Penelope’s investment property:

Type of Purchase

She purchased the property in 2015 for $380,000 and rented it out immediately.


Her yearly rental amounted to $18,720 per year, with a weekly rental of $360.


The property’s expenses amounted to $21,984, covering her interest repayments, management fees, rates and maintenance.

While property investors are no longer allowed to claim tax deductions for plant and equipment depreciation (Division 40 assets), Penelope entered into a rental agreement prior to the legislation changes in 2017, which means she can continue to claim depreciation over the useful life of these assets. 

Because of the age of the property, however, she can only claim capital works (Division 43) deductions on the minor renovations that the previous owner undertook before selling the property.

Without Depreciation vs With Depreciation Services

The following cost breakdown shows Penelope’s cash position with and without depreciation.

According to her Duo Tax depreciation schedule, Penelope could claim $5,300 in depreciation in her first year of claiming it as a tax deduction. 

A 1980-Build Townhouse Purchased for $380,000

Penelope’s numbers without a depreciation claim

Annual Rental Income
$360 x 52 weeks
Annual Property Expenses
Net Income (Pre-tax)
Income minus expenses: $18,720 - $21,984
Total Taxation Loss With No Depreciation
Tax Refund
Tax loss x tax rate: -$3,264 x 37%
Annual Costs of the Investment Property
Net income + tax refund: (-$3,264) + $1,208
Weekly loss

Penelope’s numbers with a depreciation claim of $5,300

Annual Rental Income
$360 x 52 weeks
Annual Property Expenses
Net Income (Pre-tax)
Income minus expenses: $18,720 - $21,984
Total Taxation Loss With Depreciation
Net income + depreciation: (-$3,264) + ($5,300)
Tax Refund
Total Taxation Loss x Tax Rate: -$8,564 x 37%
Annual Costs of the Investment Property
Net Income + Tax refund: (-$3,264) + ($3,169)
Weekly loss
Difference of $38 per week / $1,961 per year

Without depreciation, Penelope had to pay $40 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 reduced her out-of-pocket expense to just $2 per week.

Duo Tax saved Penelope a total of $1,961 in her first year of claiming tax depreciation on her investment property

The great thing about her depreciation schedule is that it’s valid for up to 40 years—which means Penelope 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 Penelope’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
Call us and we will ask you a few simple questions to qualify your investment property.
1300 185 498
Step 2
Order a Report
Order over the phone or via our online form and we will begin preparing your report.
Order Now
Step 3
Claim Maximum Deductions
Within approx. 5 business days your report will be delivered to you and your accountant.
View Sample Report

How can we help?

Need a quote or have questions regarding tax depreciation? fill out our short form. Feel free to browse our frequently asked questions page or request an estimate for your property below.

Office Hours

Weekdays: 8:30am – 5:30pm
Saturday: 9am – 1pm
Sunday: Closed

Subscribe & Receive $100 off!

Own an investment property? Enjoy $100 off your next tax depreciation schedule purchase and receive FREE weekly investing tips.

Investment property