The previous owner had extended the original property to add another bedroom, renovated the kitchen and bathrooms and repainted the property before Parker 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.
The following cost breakdown shows Parker’s cash position with and without depreciation in his first year of owning the property.
According to his Duo Tax depreciation schedule, Parker could claim $2,800 depreciation in his first year.
Parker’s numbers without a depreciation claim
Parker’s numbers with a depreciation claim of $2,800
Without depreciation, Parker would have to pay $92 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 $76 per week.
This means that Duo Tax was able to save Parker a total of $851 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, Parker can continue saving money each year, as long as he continues to own the property.
Our Duo Tax Rental Property Depreciation Calculator is free, so make sure to check it out!