Case Study

Brand New Warehouse Purchased for $685,000

By ordering a Duo Tax depreciation schedule and claiming depreciation on his new warehouse, Michael could significantly increase his investment income and boost his cash flow position.
He ended up saving $5,809 in his first year of owning the property!
Here's how.

The Numbers: Michael’s Investment Property

Here are some figures regarding Michael’s investment property:
Purchase Type
He purchased the warehouse in a complex of warehouses last year with a small office mezzanine and bathroom.
Rent
He secured tenants immediately who currently pay $880 rental per week - which is $45,760 per year.
Expenses
The warehouse expenses amounted to $41,210, covering his interest repayments, management fees, rates, and maintenance.

Commercial property owners can claim depreciation deductions for the building’s structure as well as any assets they own within their property. So Michael can claim depreciation on the plant and equipment (Division 40) assets that he owns and the offices’ capital works (Division 43) deductions

Without Depreciation vs With Depreciation Services

The following cost breakdown shows Michael’s cash position with and without depreciation in his first year of owning the warehouse. 

According to his Duo Tax depreciation schedule, Michael could claim $15,700 in depreciation in his first year. 

A brand new warehouse purchased for $685,000

Michael’s numbers without a depreciation claim

Annual Income
($880 x 52 weeks)
$45,760
Annual Expenses
$41,210
Pre-tax: Net Income
Income minus expenses: $45,760 - $41,210)
$4,550
Total Tax Payable
$1,684
Tax Refund
(tax loss x 37% tax rate)
$0
Annual Income from the Investment Property
[net income + tax payable: $1,684 - $0]
$2,867
Weekly income
$55

Michael’s numbers with a depreciation claim of $15,700

Annual Income
($880 x 52 weeks)
$45,760
Annual Expenses
$41,210
Pre-tax: Net Income
Income minus expenses: $45,760 - $41,210)
$4,550
Total Taxation Loss
[net income + depreciation: ($4,550) + ($15,700)]
-$11,150
Tax Refund
(tax loss x 37% tax rate)
$4,126
Annual Income from the Investment Property
[net income - tax payable: $4,550 - $4,126]
$8,676
Weekly income
$167
Difference of $112 per week/$5,809 per year

Without depreciation, Michael was only generating $55 of weekly profit from his warehouse investment. However, by taking advantage of the Australian Tax Office’s tax breaks and making a depreciation claim, he started generating $167 each week – which is $112 more than before his depreciation claim.

This means that Duo Tax was able to save Michael a total of $5,809 in the first year of owning the warehouse. 

The great thing about his depreciation schedule is that it’s valid for up to 40 years! So, Michael can continue saving money each year, as long as he continues to own the warehouse.

Here’s How Much You Could Be Claiming

As you can see from Michael’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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