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Case Study

A Brand New House Purchased for $666,000

By ordering a Duo Tax depreciation schedule and claiming depreciation on his brand new property, Chris significantly reduced his negative cash flow position one year into owning his property.
In this scenario, Chris lived in the property prior to renting it out, which affected the amount he can claim. However, he still ended up saving $2,886 in the second year of owning the property!
Here's how.

The Numbers: Chris’s Investment Property

Here are some figures regarding Chris’s investment property:
Purchase Type
he purchased a brand new house for $665,000 two years ago and rented it out six months after purchasing the property (he lived in the property for the first six months),
Rent
his yearly rental amounted to $28,080 per year - which is a weekly rental of $540,
Expenses
the property’s expenses amounted to $35,847, covering his interest repayments, management fees, rates and maintenance.

Because Chris occupied his brand new property before renting it out, he can’t claim plant and equipment (Division 40 assets) deductions and can claim only deductions for the depreciation on the property capital works (Division 43) deductions

Without Depreciation vs With Depreciation Services

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

According to his Duo Tax depreciation schedule, Chris could claim $7,800 depreciation in his second year. 

A brand house purchased for $665,000

Chris’s numbers without a depreciation claim

Annual Income
($540 x 52 weeks)
$28,080
Annual Expenses
$35,847
Pre-tax: Net Income
Income minus expenses: $28,080 - $35,847)
-$7,767
Total taxation loss
-$7,767
Tax Refund
(tax loss x 37% tax rate)
$2,874
Annual costs of the investment property
[net income + tax refund: (-$7,767) + $2,874]
-$4,893
Weekly loss
-$94

Chris’s numbers with a depreciation claim of $7,800

Annual Income
($540 x 52 weeks)
$28,080
Annual Expenses
$35,847
Pre-tax: Net Income
Income minus expenses: $28,080 - $35,847)
-$7,767
Total taxation loss
[net income + depreciation: (-$7,767) + ($7,800)]
-$15,567
Tax Refund
(tax loss x 37% tax rate)
$5,760
Annual costs of the investment property
Total taxation loss [net income + depreciation: (-$7,767) + ($5,760)]
-$2,007
Weekly loss
-$39
Difference of $56 per week/ $2,886 per year

Without depreciation, Chris had to pay $94 out of his own pocket each week. However, by taking advantage of the Australian Tax Office’s tax breaks and making a depreciation claim, Chris reduced that amount to only $39. 

This means that Duo Tax was able to save Chris a total of $2,886 in his second year of owning the investment property. 

The great thing about his depreciation schedule is that it’s valid for up to 40 years! So, Chris can continue saving money each year, as long as he continues to own the property.

Here’s How Much You Could Be Claiming

As you can see from Chris’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.

Our Duo Tax Rental Property Depreciation Calculator is free, so make sure to check it out!

Organise Your Depreciation Schedule Today!

Step 1

Qualify your Property

Call us and we will ask you a few simple questions to qualify your investment property.
Call 1300 185 498
Step 2

Order a Tax Depreciation Schedule

Order over the phone or via our online form and we will begin preparing your depreciation schedule.
Order Here
Step 3

Claim Maximum Deductions

Within approx. 5-10 business days your personalised report will be delivered to you and your accountant.
View Sample Report

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