Property tax depreciation made easy

You know residential commercial you know we did the big rocking horse Natalie the other day for example any type of investment property potentially has this tax depreciation available the only one that's excluded as your principal place of residence. 

So when you live in your house you can't make a deduction for that if you move out of your house and that then becomes an investment property then that's one that's very optimist then it becomes investment property to be able to claim this tax depreciation.

Tax Depreciation

So if you've moved out of it then we can have a look at it and make sure quantity surveyors can get some deductions for you if that exists the other one is if you actually operate a business from a premises when you want write a business from a premises it's seen as your own property but it is it is a property that still is able to take advantage of tax depreciation now in order to get an indication of what it means to an investor. 

I think the easy way is to look let's just take a couple of examples one and one in particular on a on a on a you know nice-looking new unit here and say what happens if quantity surveyors claim tax depreciation and what happens if we don't claim tax depreciation what does it do to the cash flow for an investor now we'll take a simple unit here now the numbers could be different for different properties but just to make it easy. 

I just get some numbers in here that are sort of round numbers and let's say it's bought for four hundred fifty thousand dollars from that property quantity surveyors want to get as much rent as we can we've got to play with the market and get the rent that the markets prepared to pay of course let's say that's about four hundred.

tax depreciation

And forty dollars a week in this situation what that means is gonna have an income net of about twenty two thousand eight hundred eighty dollars per year great got some income but unfortunately then we've got some expenses we have to pay the bank back otherwise they're going to come and take it. 

Quantity surveyors have to pay the rates the management fees the things in order to keep this property on this scenario let's say that's about thirty eight thousand dollars not fantastic it's costing fifteen thousand one hundred twenty dollars per year to keep this property out of the back pocket or about dollars per week. 

It's been negatively geared not a fantastic scenario there but it does get a little bit better but it's just some numbers for to play with now if we don't claim tax depreciation quantity surveyors still the text that the tax office allows us to at least make a deduction for the loss because we're operating this investment property. 

So what that means is that fifteen thousand one hundred and twenty dollars that we made as a loss we paid out two hundred a dollars a week if we're on a thirty-seven percent tax rate and quantity surveyors can write our losses against that other income a refund for the years going to be five thousand five hundred. 

And ninety-four dollars our outlay for the year dollars across china probably now is dollars per week so simply that's a loss written off against your other income and if you're on that marginal tax rate it'll mean it will cost you one hundred eighty three dollars a week to own this property if you're on a higher or lower marginal tax rate than those numbers would be a little bit different quantity surveyors do run some other scenarios.

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