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Residential case study
Commercial case study
BMT and Real Estate Professionals working together
- Introducing depreciation during an open house walk through.
- During a follow up call to a prospective investor after an open house.
- Using a depreciation estimate to help sell projects off the plan.
Tax depreciation can make a big difference to the cash flow potential of a property.
Depreciation can help make a property more affordable for investors.
A Quantity Surveyor is generally required to maximise the depreciation deductions available through a professionally prepared tax depreciation schedule.
An investor has purchased an apartment for $420,000 and is receiving $490 per week in rent for a total income of $25,480 per annum.
The estimated expenses for the property include interest, rates and management fees, which total $32,000 per annum.
The following scenario shows the investor's cash flow with and without depreciation
In this example the investor uses property depreciation to go from a negative cash flow position, paying out $79 per week, to positive cash flow, earning $3 per week on the property. By claiming depreciation this investor will have a cash flow difference of $4,255 for the year.
Tax depreciation makes a real difference to an investor's cash flow
Below is a basic property scenario demonstrating the cash-flow difference depreciation can make to a property investor.
| An apartment purchased for $420,000 | |||
| Scenario without depreciation claim | Scenario with depreciation claim of $11,500 | ||
| Annual expenses | $32,000 | Annual expenses | $32,000 |
| Annual income ($490 x 52 weeks) | $25,480 | Annual income ($490 x 52 weeks) | $25,480 |
| Pre-tax cash flow (expenses less income) | -$6,520 | Pre-tax cash flow (expenses less income) | -$6,520 |
| Total taxation loss | -$6,520 | Total taxation loss (pre-tax cash flow and depreciation claim of $11,500) | -$18,020 |
| Tax refund (tax loss x tax rate of 37%) | $2,412 | Tax refund (tax loss x tax rate of 37%) | $6,667 |
| Annual costs of the investment property (pre-tax cash flow + tax refund) | -$4,108 | Annual after tax income from the investment property (pre-tax cash flow + tax refund) | $147 |
| Weekly cost of the investment property | -$79 | Weekly cost of the investment property | $3 |
| Difference of =$82 per week | |||
Case studies and figures are based upon tax depreciation schedules completed by BMT Tax Depreciation and do not represent any particular person or investment property scenario. The information provided is a general guide and does not constitute financial, legal or taxation advice. All figures are supplied as examples and may not represent your personal circumstances.
You acknowledge and agree you must undertake your own analysis and obtain independent legal, financial and taxation advice before using, relying or acting on any information supplied on this website.
Neither BMT Tax Depreciation, nor its directors, shareholders or advisors make any representation or warranty as to the accuracy or completeness of information found in these typical 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.
The tax depreciation deductions in this case study have been calculated based on the diminishing value method of depreciation and are based upon a first full year of ownership.
Complimentary depreciation estimates
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Need appraisal letters or application forms? |
Order BMT educational material, business cards or appraisal letters online today, save time and help your clients save money faster.
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Expert speakers for your next event |
Hosting an event? Our depreciation experts can speak at your next investor night or staff training catch up about the cash flow benefits of depreciation. Our experts are knowledgeable and engaging and can tailor their presentation to your next event.
| Complimentary webinars |
BMT hosts regular webinars covering a range of depreciation topics including how a tax depreciation schedule is used to maximise the cash returns for investors.
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Articles for newsletters and publications |
BMT can offer a range of articles on depreciation and related topics free to include in newsletters or emails. Our articles help to explain the benefits of depreciation and other related topics in an easy to understand way.
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Need help resolving tenant disputes? |
Our property manager's guide to tenant damage PDF includes a list of common assets in a residential property and provides some examples on how you can use this to assign a fair value to the existing assets.
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Co-branded tools and brochures |
Need a calculator for your website?
- BMT Tax Depreciation offer co-branding of our Tax Depreciation Calculator, Construction Cost Calculator and our online quote form for your website.
- Co-branded educational materials: BMT offer brochures and other educational material co-branded for your office.