Second Hand Property
Unleashing the Power of Depreciation: Maria’s Journey to Maximising Returns
Maria’s Story: A Case Study in Harnessing Depreciation for Investment Success
“As a property investor who had just purchased a second-hand property, I wanted to make the most out of any available deductions. The house spanned about 162sqm and cost me $800,000, and let’s just say I was determined to make the most of it.
My accountant informed me that I needed the help of a quantity surveyor to secure a tax depreciation schedule which would detail what tax deductions I was entitled to claim. I wasn’t sure if I could claim tax depreciation on a second-hand property, but after some extensive research and reading plenty of reviews, I decided to reach out to Washington Brown for their advice.
This was my first time using their services, and I was thoroughly impressed. The team was incredibly knowledgeable, and they guided me throughout the entire process. I was truly impressed by their attention to detail, the reasonable costing, and the outcome of the depreciation report definitely made a positive impact on my cash flow. If you own a second-hand investment property and are unsure about depreciation benefits, I highly recommend Washington Brown!”
Maria – Washington Brown customer
Property Profile
Read how claiming depreciation on her second-hand investment property helped Maria improve her cash flow position:
|
Property Type |
Second-Hand House |
|
Bedrooms |
4 |
|
Bathrooms |
2 |
|
Internal Area |
162sqm |
|
Build Year |
2014 |
|
Purchase Price |
$800,000 |
Depreciation Analysis
Upon acquisition, Maria adopted a strategic approach to capitalise on depreciation benefits. In the first year alone, her depreciation claim amounted to $7,507, resulting in substantial tax savings of $2,778 based on her tax rate of 37%. Over the ownership period, the cumulative depreciation claim could total an impressive $227,113.
|
1st Year Claim |
$7,507 |
|
1st Year Tax Savings |
$2,778 |
|
Total Claim |
$227,113 |
Financial Impact Comparison
To illustrate the impact of depreciation on investment returns, Maria compared scenarios with and without claiming depreciation.
 |
With Depreciation Claim |
Without Claim |
|---|---|---|
|
Rent received at $800 per week |
$41,600 |
$41,600 |
|
Interest (6% of 80% borrowing of $800k purchase price) |
-$38,400 |
-$38,400 |
|
Other expenses (property management, rates, etc.) |
-$12,000 |
-$12,000 |
|
Cash outlay before depreciation (a) |
-$8,800 |
-$8,800 |
|
Depreciation Year 1 |
-$7,507 |
$0 |
|
Total tax loss |
-$16,307 |
-$8,800 |
|
Enter your text here… |
With Depreciation Claim |
Without Claim |
|---|---|---|
|
Tax Refund @ 37% (b) |
$6,034 |
$3,256 |
|
Annual profit/loss to own property = (a + b) |
-$2,766 |
-$5,544 |
|
Weekly profit/loss to own property |
-$53 |
-$107 |
The absence of depreciation claims led to a higher annual loss of -$5,544, underscoring the critical role of depreciation in optimising investment returns.
Conclusion:
Maria’s experience highlights the indispensable role of depreciation in enhancing the financial viability of second-hand investment properties.
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