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Towards the end of the first year of owning the property, John's annual outlay amounted to $5719.20 or $113.83 per week. At the end of the year, John completed a tax depreciation schedule with Australian Tax Depreciation Services who completed an onsite inspection of the property and created a comprehensive tax depreciation schedule. Using the diminishing value method - with the completion of a tax depreciation schedule from ATDS, John could claim $17,291 in depreciation in the first full financial year. The following tables show the financial situation with and without depreciation.
| Without Depreciation | |
|---|---|
| Annual income | $20,800.00 |
| Annual expenses | $29,256.00 |
| Pre-tax cash flow (expenses less income) | -$8,456.00 |
| Total taxation loss | -$8,456.00 |
| Tax refund (tax loss x tax rate of 30%) | $2,536.80 |
| Annual cash flow of investment property (pre-tax cash flow & tax refund) |
-$5,719.20 |
| Weekly cash flow of investment property | -$113.83 |
| WITH Tax Depreciation | |
|---|---|
| Annual income | $20,800.00 |
| Annual expenses | $29,256.00 |
| Pre-tax cash flow (expenses less income) | -$8,456.00 |
| Total taxation loss (pre-tax cash flow + depreciation) |
-$25,747.00 |
| Tax refund (tax loss x tax rate of 30%) | $7,724.10 |
| Annual cash flow of investment property (pre-tax cash flow & tax refund) |
-$731.90 |
| Weekly cash flow of investment property | -$14.05 |
You acknowledge and agree you must undertake your own analysis and obtain your own independent advice before using, relying or acting on any information on this website.
The tax depreciation deductions in this case study have been based on the diminishing value method of depreciation and are based upon the first full year of ownership for depreciating assets that were held on or after10 May 2006 but before 9 May 2017 Budget changes.
A tax rate of 30% has been used for the scenario and an interest rate of 5%.
Case studies and figures are based upon a tax depreciation schedule completed by Australian Tax Depreciation services using the diminishing value method and do not represent any particular person or investment property scenario.
The information is provided as a general guide and does not constitute taxation, financial or legal advice.
All figures are supplied as examples only.
Neither Australian Tax Depreciation Services, nor its directors or advisors make any representations or warranty as to the accuracy or completeness of information found in these examples. Nor will they have any liability to you or any other party for any representations (expressed or implied) contained in, or any omissions from, that information.
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