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Episode 010 | Tax Depreciation (Case Study)

Here are the Case Studies mentioned in Episode 010 | Tax Depreciation of The Property Couch:

Tax Depreciation Case Study 1:

A $600,000 – $700,000 period home with a rental income of $22,880 per annum

An investor owns a period home purchased for between $600,000 and $700,000 with a rental income of $440 per week.
Expenses for their property such as interest, rates and management fees totaled to $40,950. A depreciation schedule from specialist Quantity Surveyors BMT Tax Depreciation found the investor would be entitled to claim $9,880 in depreciation in the first financial year. By claiming depreciation deductions, BMT was able to help the investor to turn their negative cash flow into a more positive one, reducing the costs involved in holding the property by $3,655.
The following scenario shows the investors cash flow with and without the depreciation claim:

Tax depreciation case study 1 - The Property Couch
This investor used property depreciation to reduce the costs of holding their property. Without depreciation, they were paying out $219 per week. By taking advantage of tax legislation and making a depreciation claim, the weekly cost of holding the property is reduced to $149.

 

 

Tax Depreciation Case Study 2:

A $400,000 – $500,000 older villa with a rental income of $21,060 per annum

An investor owns an older villa purchased for between $400,000 and $500,000 with a rental income of $405 per week.
Expenses for their property such as interest, rates and management fees totalled to $29,610. A depreciation schedule from specialist Quantity Surveyors BMT Tax Depreciation found the investor would be entitled to claim $7,930 in depreciation in the first financial year. By claiming depreciation deductions, BMT was able to help the investor turn their negative cash flow into a more positive one, reducing the costs involved in holding the property by $2,935.
The following scenario shows the investors cash flow with and without the depreciation claim:

Tax depreciation case study 2 - The Property Couch

This investor used property depreciation to reduce the costs of holding their property. Without depreciation, they were paying out $104 per week. By taking advantage of tax legislation and making a depreciation claim, the weekly cost of holding the property is reduced to $47.

 

Case studies provided by BMT Tax Depreciation.
Bradley Beer (B. Con. Mgt, AAIQS, MRICS) is the Chief Executive Officer of BMT Tax Depreciation.

Episode 010 | Tax Depreciation

It’s common to hear people saying things such as , “This property would give you heaps of depreciation benefits!” But do you know how does Tax Depreciation Schedule works when investing in property in Australia? This time on The Property Couch, Bryce Holdaway and Ben Kingsley is joined by the Managing Director of BMT Quantity Surveyors, Bradley Beer to explain what tax depreciation actually meant and how does it work.

It’s important to understand that depreciation benefits should not be the prime reason for investing in property because depreciation amount will eventually deplete. Hence, it is more important to select the right location and an investment grade asset and to regard the depreciation that follows as a additional benefit.

Brad Beer had prepared two case studies for this podcast. The first is a $600,000 – $700,000 period home with a rental income of $22,880 per annum and the second is a $400,000 – $500,000 older villa with a rental income of $21,060 per annum. For access to the Case Studies mentioned in the podcast, please click here.

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