Property Depreciation Provides Added Bonus for Investors
Property Investors in inner city suburbs are taking advantage of property depreciation to counter costs of prestigious apartment complexes. Owners of new properties purchased after 9 May 2017 which earn a rental income can claim property tax depreciation on the building (Division 43) and some of the contents on the property known as plant and equipment items (Division 40). Property depreciation allowances will help investors to manage their cash flow and provide a cash return through their income tax.
Introducing the Saccharo
The Saccharo complex at St Lucia, Brisbane features 13 bespoke modern luxury apartments over four levels with high end appliances, quality finishes and smart technology to provide comfort for home owners or investors looking at the executive rental market.
Napier & Blakeley were involved in providing quantity surveying support for the project to minimise the financial risk for the developer, Pitman Properties. Working with our NBtax residential depreciation team our Quantity Surveyors prepared property depreciation estimates for potential buyers and property depreciation reports for property investors seeking to rent out these apartments.
Calculating Tax Depreciation
Tax depreciation allowances applicable for the Saccharo included 2.5% for the construction costs of the building, plus between 5 to 20 percent of the property's purchase price for plant and equipment items on the property.
Some of the unique features of these apartments which have a reported life expectancy of up to 10 years by the Australian Tax Office and can be included as depreciating assets under the (Division 40) allowance include?
- Kitchen appliances, hotplates, dishwasher, microwave, ducted range hood, freezer, coffee machines
- High quality carpet
- Free standing lights, furniture, blinds, curtains
- Air conditioning and security alarms
- Gas fireplace
- Pool, hot tub, sauna
- Carparks, storage area, ventilation systems and lifts.
Typically investors could claim up to $28,791 in depreciation allowances for Division 43 and 40 in the first year based on a two bedroom apartment with a purchase price of $699,000. This is a significant deduction for property investors seeking to offset rental income and reduce their taxes.
Providing Value for Investors and Property Professionals
If you are a developer, project marketer, real estate agent, accountant or financial advisor, we can help your clients understand the value of depreciation to deliver a better return on their investment property.
Our company Napier & Blakeley has been involved in the construction of many new apartment complexes throughout Asia for more than 30 years. This experience gives us an indepth knowledge of building process and the construction costs, as well as related tax legislation.
Our residential tax depreciation unit, NBtax can provide depreciation schedules and estimates for a wide range of properties situated in all states of Australia. In cases, where we have been involved in the construction of a residential apartments project, we can offer depreciation schedules at a special rate for your clients.
To obtain an estimate of your property tax depreciation allowances go to our online calculator at www.nbtax.com.au .