Case Study

Boosting Cash Flow on a 10-Year-Old Townhouse

After purchasing her townhouse for $440,000, homeowner Christina ordered a Duo Tax depreciation schedule and claimed depreciation on a property she purchased in 2014 but recently turned into an investment. This helped Christina start generating a small profit in her first year as an investor.
She saved $2,553 in her first year of claiming property tax depreciation!
Here's how.

The Numbers: Christina’s Investment Property

Here are some figures regarding Christina’s investment property:
Purchase Type
She purchased the property in 2014 for $440,000 and only started renting it out last year,
Rent
Her yearly rental amounted to $21,320 per year, which is a weekly rental of $410.
Expenses
The property’s expenses amounted to $24,902, covering her interest repayments, management fees, rates, and maintenance.

While Christina couldn’t 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 Christina’s cash position with and without depreciation in her first year of owning the property. 

According to her Duo Tax depreciation schedule, Christina could claim $6,900 depreciation in her first year of using the property as an investment.

 

A 10-year-old townhouse purchased for $440,000

Christina’s numbers without a depreciation claim

Annual Income
($410 x 52 weeks)
$21,320
Annual Expenses
$24,902
Pre-tax: Net Income
Income minus expenses: $21,320 - $24,902)
-$3,582
Total Taxation Loss
-$3,582
Tax Refund
(tax loss x 37% tax rate)
$1,325
Annual Costs of the Investment Property
[net income + tax refund: (-$3,582) + $1,325]
-$2,257
Weekly loss
-$43

Christina’s numbers with a depreciation claim of $6,900

Annual Income
($410 x 52 weeks)
$21,320
Annual Expenses
$24,902
Pre-tax: Net Income
Income minus expenses: $21,320 - $24,902)
-$3,582
Total Taxation Loss
[net income + depreciation: (-$3,582) + ($6,900)]
-$10,482
Tax Refund
(tax loss x 37% tax rate)
$3,878
Annual Income from the Investment Property
[net income - tax payable: -$3,582 - $3,878]
$296
Weekly income
$6
Difference of $49 per week/$2,553 per year

Without depreciation, Christina had to pay $43 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 reduced her out-of-pocket expenses completely and started generating $6 of income per week.

Duo Tax saved Christina a total of $2,553 in her first year of turning her property into an investment.

The great thing about her depreciation schedule is that it’s valid for up to 40 years. Christina 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 Christina’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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