A Townhouse Built Before 1987 Purchased for $328,000
The Numbers: Nathan’s Investment Property
Type of Purchase
The previous owner had extended the original structure to add another bedroom, renovated the kitchen and bathrooms and repainted the property before Nathan purchased it. As a result, he is only able to claim depreciation on the renovations of the property. This means he can’t claim depreciation on any 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 Nathan’s cash position with and without depreciation in his first year of owning the property.
According to his Duo Tax depreciation schedule, Nathan could claim $1,800 depreciation in his first year of renting the property out.
Nathan’s numbers without a depreciation claim
Nathan’s numbers with a depreciation claim of $1,800
Without depreciation, Nathan would have to pay $28 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 reduced that payment to $15 per week.
This means that Duo Tax was able to save Nathan a total of $666 in his first 18 months of owning the investment property.
The great thing about his depreciation schedule is that it’s valid for up to 40 years! So, Nathan 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.