Case study:
A new house purchased for $800,000

The following table shows Chad’s scenario both before and after a depreciation claim of $18,700 was claimed.

A new house purchased for $800,000
Scenario without depreciation claim
Annual income ($595 x 52 weeks) $30,940
Annual expenses $49,775
Pre-tax cash flow (expenses less income) -$18,835
Total taxation loss -$18,835
Tax refund (tax loss x tax rate of 37%) $6,969
Annual costs of the investment property (pre-tax cash flow + tax refund) -$11,866
Weekly cost of the investment property -$228
Scenario with depreciation claim of $18,700
Annual income ($595 x 52 weeks) $30,940
Annual expenses $49,775
Pre-tax cash flow (expenses less income) -$18,835
Total taxation loss (pre-tax cash flow + depreciation) -$37,535
Tax refund (tax loss x tax rate of 37%) $13,888
Annual cash flow of the investment property (pre-tax cash flow + tax refund) -$4,947
Weekly cash flow of the investment property -$95
Difference of $133 per week

By claiming depreciation, Chad reduced his annual outlay for the property to $4,947 per annum or $95 per week. This was a difference of $133 per week in Chad’s pocket, or $6,919 for the first full financial year.


Assumptions and disclaimer

Case studies and figures are based upon tax depreciation schedules completed by BMT Tax Depreciation and do not represent any particular person or investment property scenario. The information provided is a general guide and does not constitute financial, legal or taxation advice. All figures are supplied as examples and may not represent your personal circumstances.

You acknowledge and agree you must undertake your own analysis and obtain independent legal, financial and taxation advice before using, relying or acting on any information supplied on this website.

Neither BMT Tax Depreciation, nor its directors, shareholders or advisors make any representation or warranty as to the accuracy or completeness of information found in these typical examples. Nor will they have any liability to you or any other party for any representations (expressed or implied) contained in, or any omissions from, that information.

The tax depreciation deductions in this case study have been calculated based on the diminishing value method of depreciation and are based upon a first full year of ownership. Marginal tax rates relevant to 2014 – 2015 financial year have been assumed.

Related case studies:
A house purchased for $300,000

An old three bedroom house built in 1970 purchased for $500,000

A new three bedroom house purchased for $600,000

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