Case Study

An Apartment Purchased in 2010 for $459,000

By ordering a tax depreciation schedule and claiming depreciation on an apartment she recently turned into an investment property, Isabella went from being in a significant negative cash flow position to generating a positive cash flow.
In fact, despite only claiming depreciation years after purchasing the property, Isabella still managed to save $3,737 in her first year of owning the property!
Here's how.

The Numbers: Isabella’s Investment Property

Here are some figures regarding Isabella’s investment property:
Purchase Type
She purchased an apartment in 2010 for $459,000 and started renting it out immediately.
Rent
Her yearly rental amounted to $22,100 per year—which is a weekly rental of $425.
Expenses
The property’s expenses amounted to $25,827, covering her interest repayments, management fees, rates, and maintenance.

While Isabella wasn’t able to claim deductions for the depreciation on the property’s existing plant and equipment (Division 40 assets), she was able to claim depreciation on the property’s capital works (Division 43) deductions

Without Depreciation vs With Depreciation Services

The following cost breakdown shows Isabella’s cash position with and without a depreciation claim.

According to her Duo Tax depreciation schedule, Isabella could claim $10,100 in depreciation in her first year. 

An apartment purchased in 2010 for $459,000

Isabella’s numbers without a depreciation claim

Annual Income
($425 x 52 weeks)
$22,100
Annual Expenses
$25,827
Pre-tax: Net Income
Income minus expenses: $22,100 - $25,827)
-$3,727
Total Taxation Loss
-$3,727
Tax Refund
(tax loss x 37% tax rate)
$1,379
Annual Costs of the Investment Property
[net income + tax refund: (-$3,727) + $1,379]
-$2,348
Weekly loss
-$45

Isabella’s numbers with a depreciation claim of $10,100

Annual Income
($425 x 52 weeks)
$22,100
Annual Expenses
$25,827
Pre-tax: Net Income
Income minus expenses: $22,100 - $25,827)
-$3,727
Total Taxation Loss
[net income + depreciation: (-$3,727) + ($10,100)]
-$13,827
Tax Refund
(tax loss x 37% tax rate)
$5,116
Annual Income from the Investment Property
[net income - tax payable: -$3,727 - $5,116]
$1,389
Weekly income
$27
Difference of $72 per week/ $3,737 per year

Without depreciation, Isabella had to pay $45 out of her own pocket each week. However, by taking advantage of the Australian Tax Office’s tax breaks and making a depreciation claim, Isabella started pocketing $27 each week. 

 

This means that Duo Tax was able to save Isabella a total of $3,737 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, Isabella 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 Isabella’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.Call us and we will ask you a few simple questions to qualify your investment property.
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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