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Case Study

A New Apartment Purchased for $757,000

By ordering a Duo Tax depreciation schedule and claiming depreciation on her brand new apartment, Amelia went from being in a negative cash flow position to generating some positive cash flow from her investment property.
Brand new properties generally offer significant tax deductions, so she ended up saving $7,511.
Here's how.

The Numbers: Amelia’s Investment Property

Here are some figures regarding Amelia’s investment property:
Purchase Type
she purchased a brand new apartment for $757,000 one year ago and rented it out immediately,
Rent
her yearly rental amounted to $32,500 per year - which is a weekly rental of $625,
Expenses
the property’s expenses amounted to $40,322, covering her interest repayments, management fees, rates and maintenance.

Because Amelia has invested in a brand new apartment, she can claim deductions for the depreciation on the property’s 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 Amelia’s cash position with and without depreciation in her first year of owning the property. 

According to her Duo Tax depreciation schedule, Amelia could claim $20,300 depreciation in her first year. 

A Brand New Apartment Purchased for $757,000

Amelia’s numbers without a depreciation claim

Annual Income
($625 x 52 weeks)
$32,500
Annual Expenses
$40,322
Pre-tax: Net Income
Income minus expenses: $32,500 - $40,322)
-$7,822
Total taxation loss
-$7,822
Tax Refund
(tax loss x 37% tax rate)
$2,894
Annual costs of the investment property
[net income + tax refund: (-$7,822) + $2,894]
-$4,928
Weekly loss
-$95

Amelia’s numbers with a depreciation claim of $7,511

Annual Income
($625 x 52 weeks)
$32,500
Annual Expenses
$40,322
Pre-tax: Net Income
Income minus expenses: $32,500 - $40,322)
-$7,822
Total taxation loss
[net income + depreciation: (-$7,822) + ($7,511)]
-$28,122
Tax Refund
(tax loss x 37% tax rate)
$10,405
Annual costs of the investment property
Total taxation loss [net income + depreciation: (-$7,822) + ($10,405)]
$2,583
Weekly income
$50
Difference of $144 per week/ $7,511 per year

Without depreciation, Amelia had to pay $95 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 went from covering the loss to actually generating $50 each week. 

This means that Duo Tax was able to save Amelia a total of $7,511 in her first year of owning the investment property. 

The great thing about her depreciation schedule is that it’s valid for up to 40 years! So, Amelia 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 Amelia’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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