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Case Study

A House Built Before 1987 Purchased for $439,000

By ordering a Duo Tax depreciation schedule and claiming depreciation on his house that was built before 1987, Oliver went from being in a significant negative cash flow position to being in a far more manageable cash flow position.
He ended up saving $2,146 in his first year of owning the property!
Here's how.

The Numbers: Oliver’s Investment Property

Here are some figures regarding Oliver’s investment property:
Purchase Type
he purchased a house originally built in 1980 for $439,000 one year ago and rented it out immediately,
Rent
his yearly rental amounted to $20,800 per year - which is a weekly rental of $400,
Expenses
the property’s expenses amounted to $24,854, covering her interest repayments, management fees, rates and maintenance.

Oliver renovated the kitchen and bathroom and installed new blinds and floor coverings. As a result, he is able to claim depreciation on the property’s newly installed 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 Oliver’s cash position with and without depreciation in his first year of owning the property. 

According to his Duo Tax depreciation schedule, Oliver could claim $5,800 depreciation in his first year. 

A House Built in 1980 Purchased for $439,00

Oliver’s numbers without a depreciation claim

Annual Income
($400 x 52 weeks)
$20,800
Annual Expenses
$24,854
Pre-tax: Net Income
Income minus expenses: $20,800 - $24,854)
-$4,054
Total taxation loss
-$4,054
Tax Refund
(tax loss x 37% tax rate)
$1,500
Annual costs of the investment property
[net income + tax refund: (-$4,054) + $1,500]
-$2,554
Weekly loss
-$49

Oliver’s numbers with a depreciation claim of $2,146

Annual Income
($400 x 52 weeks)
$20,800
Annual Expenses
$24,854
Pre-tax: Net Income
Income minus expenses: $20,800 - $24,854)
-$4,054
Total taxation loss
[net income + depreciation: (-$4,054) + ($2,146)]
-$9,854
Tax Refund
(tax loss x 37% tax rate)
$3,646
Annual costs of the investment property
Total taxation loss [net income + depreciation: (-$4,054) + ($3,646)]
-$408
Weekly loss
-$8
Difference of $41 per week/ $2,146 per year

Without depreciation, Oliver had to pay $49 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 significantly reduced that payment to $8 per week. 

This means that Duo Tax was able to save Oliver a total of $2,146 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, Oliver 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 Oliver’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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