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What is Depreciation?
• Hidden cash flow for property investors
• As buildings get older items wear out – they go down in value
• You can get a tax benefit for this!
• You can’t claim depreciation for your PPOR
What is Depreciation?
Must be carried out by a Quantity Surveyor (QS) then applied
by your accountant.
What is a Quantity Surveyor?
A specialist in building measurement and cost
estimating
Pre Construction
Construction
Post Construction
Tax Depreciation Estimates
• Gives prospective purchasers/investors an accurate figure of potential tax depreciation
• Helps to calculate the financial performance of a property investment
What is Depreciation?
Myth:
You can only get depreciation out of new or near new
buildings.
WRONG!
Depreciation
• There is no age restriction on Plant and Equipment.
• So when you buy an old property these effectively start a new life.
• This is why old buildings still have depreciation benefits.
Depreciation
Depreciation may include:
• The Building and built surrounds (i.e. carport)
• Plant and equipment (i.e. hot water system)
• Furniture
• Where in a unit block with Body Corp, common areas
Depreciation Example 1Furnished Unit Block
$385,856 over 9 years. They even depreciate the egg cups!
Depreciation Example 2Brand New Block of 10 x 1 Bed
Units
$81,000 first year!!!
Depreciation Example 3Old Block of 2 Flats
Scrapping value $15,000
Depreciation Example 4Old Furniture for the Dump
$40k to Vinnies
Depreciation Example 5Old House
Even a 30 year old building has
$54,178 of deductions!
Summary
• Depreciation is a paper loss only
• You get a tax break for this!
• MUST be done by a QS, NOT accountant
• Applies to old and new
• Can be back dated 2 years
• If you are an investor and haven’t got a depreciation schedule, we’ve just made you money!
What did you learn today?
Renovator not Ruinmaker The Reno KingsMaximizing Rent and Renting it Fast Colleen SutherlandInvestor Profile Matt CosgroveTax, Structures & Asset Protection Warren BlackFinance Kerri BurnessProperty Strategies The Reno KingsBrilliant Bathrooms & Killer Kitchens Paul EslickDepreciation The Reno Kings
TOMORROW: DAY 3 ADDING TREMENDOUS VALUE
The Reno Kings Adam Jones
Investor Profile
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