The Block 2022 was like nothing audiences – or crew – have experienced before. From the charming location and impressive renovations to the jaw-dropping depreciation deductions and unexpected auction outcome, this season has been the most extraordinary yet.
Generating a record-winning profit of $1,586,666.666, Omar and Oz have won The Block 2022 selling their property at auction for $5,666,666.666 to serial Block buyer Danny Wallis.
Danny Wallis also purchased the following two properties sold on auction day including Tom and Sarah-Jane’s House 1 which sold for $4,100,000.99, generating a profit of only $20,000.99, and Rachel and Ryan’s House 2, which sold for $4,249,000.50 post-auction generating a profit of $169,000.50.
The Block 2022 is located in picturesque Gisborne South within the Victorian Macedon Ranges. Only a forty-five-minute drive from Melbourne, Gisborne is known for its sprawling country homesteads, tree-lined streets, comfy cafés and restaurants with beautiful wineries and olive groves. The location hits this year’s theme of ‘tree change’ spot on.
The teams were assigned with renovating their properties into homestead-style houses plus host Scott Cam renovated a house of his own. All houses contain five bedrooms, three bathrooms and spacious living and dining areas with luxurious butler’s pantries, walk-in wardrobes and mudrooms. For the first time, contestants were also tasked with planning the landscaping for more than 700 square meters.
BMT Tax Depreciation was asked to estimate the depreciation deductions available on this season’s properties on The Block.
Below we outline the deductions found and just how advantageous they could be for an investor buyer.
Jaw-dropping numbers
Because of the substantial renovations completed and brand-new assets installed the houses are brimming with depreciation deductions.
The table below demonstrates the depreciation deductions BMT found on The Block 2022.
Ankur and Sharon’s house (House 3) generated the highest deductions with a total of $5,840,166, more than $100,000 higher than house two in second place. The other houses don’t fall far behind with an average total of $5,292,597 in depreciation deductions and an average of $203,340 in the first full financial year.
There was a total of $31,755,586 in depreciation deductions found across all six houses for the life of the properties. To break this down the total capital works deductions (Division 43) were calculated at $28,911,186 and the plant and equipment (Division 40) deductions totaled $2,844,400.
The Block auction which was held on Saturday 5 November was no doubt discouraging for the other two teams, but this isn’t game over for properties that failed to sell on auction day. Nine will “continue to negotiate with interested buyers to sell these homes, which are still on the market”, Scott Cam revealed. These properties still have the potential to fetch well over the reserve.
While the auction didn’t go according to expectations, The Block properties hold the greatest deductions than ever before making it an enticing purchase for investors.
Bradley Beer, Chief Executive Officer of BMT, said that savvy investors will take these lucrative deductions into account when considering any Block purchases as these deductions have the potential to significantly improve an investor’s cash flow.
The houses on The Block undergo extensive renovations including new flooring, new roofing, new shelving and cabinets, new kitchens and bathrooms and even new rooms constructed. These upgrades make for attractive deductions. The houses are essentially stripped down to their structural component and built back up.
Substantial renovations boost an investor’s eligibility for depreciation deductions.
With over thirty million dollars in depreciation deductions, the houses on The Block are a property investor’s goldmine. They’re filled with brand new assets, have strong tenant appeal, low to no maintenance (as they’re newly renovated) resulting in fewer annual expenses and offer significant depreciation benefits.
The appliances on The Block alone generated strong deductions. For instance, Omar and Oz’s kitchen features $250,000 in top-end appliances. Even if the furniture and other assets are removed for future tenants, the fixtures and fittings alone such as light fittings, kitchen and laundry appliances, blinds and curtains and more hold profitable deductions.
Claiming depreciation is an essential step to not only optimising cash flow but also building and maintaining a successful property portfolio. This applies to all types of property investors.
With over twenty years’ experience BMT Tax Depreciation are the industry’s leading experts in property depreciation.
To learn more about the depreciation available in substantially renovated properties or depreciation in general contact BMT on 1300 728 726 or Request a Quote.