New Home in Drysdale, Victoria Delivers Investors Depreciation Benefits
Following on from the boom in new home construction over the past 12 months, we’re seeing many investors able to reap the rewards through depreciation allowances.
Rural townships have had a population boost as remote workers escape to the country looking for a better work life balance. Savvy investors are taking advantage of this trend and building new modern homes catering to this growing market.
In this case study, we feature a free standing new home in the tranquil rural township of Drysdale on the Bellarine Peninsular. Built during 2021, the three bedroom home is an ideal rental property for young families or couples. As the home is newly built, our client can claim depreciation allowances for both the Building and Plant & Equipment (Divisions 43 & 40).
Our NBtax team inspected the property and calculated total depreciation deductions of $10,542 for the first full financial year. These depreciation valuations are based primarily on the construction costs of the house plus the cost price of inclusions such as white goods, ducted air conditioning, smoke alarms, hot water system, carpet, floating timber coverings, and more.
With rental income starting at approximately $400 per week, our client will be able to offset this income through depreciation deductions claimable on their income tax. Over the next 40 years, our client can claim up to $234,214 in depreciation deductions for this investment property.
Below are some facts on the property market in Drysdale. The town is located on the Bellarine Peninsula in Victoria 98 km south-west of Melbourne and 22 km east of Geelong. It sits 65m above sea level with a population of 5,349 according to the 2016 census.
Once noted for its potato and onion production, in recent years Drysdale has become a residential satellite of Geelong. Historically a pleasant holiday resort - with people visiting to "take the waters" at Clifton Springs (known for its healing qualities), the towns have become part of the larger urban sprawl along the shoreline of Port Phillip Bay. Within easy driving distance to Geelong, its popularity is growing as an affordable alternative for city dwellers seeking a lifestyle change.
- Median house sale price - $862,500 29.7% growth over 12 months
- Median house unit sale price - $510,000 12.8% growth over 12 months
- Median house rental price - $440 per week 15.0% growth over 12 months
- Median unit rental price - $385 per week 10.0% growth over 12 months
The Drysdale median house price if $440 per week based on 47 rental listings in the past 12 months. The median unit and apartment price is $385 per week based on 14 rental listings in the past 12 months. (Statistical Information from realestate.com.au)
If you’ve built a new home as part of your investment portfolio, we encourage you to arrange a comprehensive depreciation schedule with our highly experienced NBtax team.