Hi All,
Have many people had experience with claiming depreciation on a new home they’ve built then renting out?
Do you know if it’s worth it when your on a lower income level?
Reason being, I’ve been considering building a new home and claiming the depreciation on a PAYG level to help make the new property close to + gearing – though on my wage of 38k I’m not sure whether its worth it. I guess I’ll have to get the calculator out:)
cheers
wayne
Wayne Leech
*Below are links to my websites – any feedback, comments would be appreciated:)
http://www.landsearcher.com.au – List your land for FREE (Private sellers only)
http://www.homesearcher.com.au – List your property for FREE (Private sellers only)Hi Wayne,
Given depreciation entitles you to a building claim of 2.5% of building construction costs/annum over 40 years and you have around 15% depreciable plant and and equipment claims eligible over the life of the property I would say ‘Yes – it is worth it’.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
Reason being, I’ve been considering building a new home and claiming the depreciation on a PAYG level to help make the new property close to + gearing –
Wayne,
CAn you clarify what you mean by claiming it on a PAYG level.?
For it ot be +ve geared your rent will have to cover the expenses (interest, rates, etc)
Will this be the case ? If so, then the tax bracket you are in is not important…KPKP-
Think Wayne means getting the “Tax Variation” schedule done ( 15-15 )to adjust tax taken out of PAYG wage..As promoted by Margaret Lomas and others.
As for the depreciation schedule, i think it’s definetly worth it..
REDWING
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow CalculatorHi Guys,
I’m not exactly sure if it is PAYG tax.
I recently went to a “dale alcock” turnkey investment seminar.
They we’re showing examples of how if you build a new home for the first five years you can claim depreciation on the new home and item’s within the new home – eg, flooring, blinds, air con and so on.
On a home and land package of around $240k and with someone on a salary of $60k a year – you could claim around $5-6k p/yr.
The spokes person then said that with the ATO you can fill out a tax claim form that would allow you to recieve that $5-6K on a fortnightly bases – rather than a lump sum at the end of the financial year. This would work out that you could be recieving an additional of around $115 a week, on top of your rent!
I was just wondering if anyone is claiming this 5 year depreciation – and if it works out as good as these seminar guys talk it up to be?
Cheers
Wayne
Wayne Leech
*Below are links to my websites – any feedback, comments would be appreciated:)
http://www.landsearcher.com.au – List your land for FREE (Private sellers only)
http://www.homesearcher.com.au – List your property for FREE (Private sellers only)Do some more homework Wayne,
The bottom line is you are dealing with a home builder whose business is to sell new homes.
The fact that they package it up to make it easier for you doesn’t necessarily mean they are there to help you or do you any favours.(help you profit)
Sometimes if you do more of the work yourself ( look at other methods to purchase a property) you will be better off.
Don’t jump in till you have looked at alternatives.
Effectively you are being mesmerised by the supposed tax saving,, whereas in fact you should be looking at what it is costing you…Cheers…KP
Wayne, any new home can be depreciated (and should be!)
Any competent QS can do a depreciation schedule for you so that your accountant knows what to claim, and if you want to, it’s easy to fill in the form that Redwing mentioned to get your tax back fortnightly/weekly (however you are paid), rather than a lump sum at end of year.
So don’t go to this mob just cos they’re selling the tax side of it, cos you can do that with any property that is built new, not just theirs….
Cheers
MelHi guys,
Thanks for your feedback – Muchly appreciated!
No, I won’t be purchasing anything through these guys:)
– Wayne
Wayne Leech
*Below are links to my websites – any feedback, comments would be appreciated:)
http://www.landsearcher.com.au – List your land for FREE (Private sellers only)
http://www.homesearcher.com.au – List your property for FREE (Private sellers only)Originally posted by waynel2:The spokes person then said that with the ATO you can fill out a tax claim form that would allow you to recieve that $5-6K on a fortnightly bases – rather than a lump sum at the end of the financial year. This would work out that you could be recieving an additional of around $115 a week, on top of your rent!
I was just wondering if anyone is claiming this 5 year depreciation – and if it works out as good as these seminar guys talk it up to be?
Hi Wayne,
As others have said the capacity to reduce your pay period tax applies under Section 15.15 of the Tax Act. This section actually applies to 58 different sub-categories of investment – one of which happens to be property investment.
The form (NAT 2036) is availbel on the ATO website and can be completed at any stage of the financial year up to 15th May of that year. A 15.15 declaration only covers one financial year at a time and will need to be redone for each year you want to use such a facility.
Completing a 15.15 is very simple and requires the same type of book-keeping as doing your own tax except you are projecting your income and expenses. As such your ‘work’ income is included along with rental income and is offset by work related expenses, interest costs, rates, taxes, insurance, management fees etc.
For someone on a salary this is relatively straight forward – however you need to be aware that the Commissioner of TAxation does not have to approve the reduction in pay period tax and as such it is in your interests to ensure you get it pretty right. The tax office get narky if you use a 15.15 and then end up owing them tax at the end of the financial year.
The 15.15 is highly suitable for negative gearers as it maximises your cashflow situation and can ensure that an investor is not dipping into their pocket too far.
In our situation we have been able to use 15.15 to buy ‘negatively geared’ property that, with the benefits of depreciation, haven’t affected out weekly cashflow. At the same time we have enjoyed significant growth in value.
Be aware that depreciation claims actually have a 40 year duration from construction (post 1985) and depending upon whether or not you prefer to use the prime cost method or diminishing value method of claiming depreciation there can be a more significant claim available in the first five years of ownership.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
Thanks Derek,
once again – your feedback has been very helpful!
Hey, have you thought of writing a book;)
Is this the form your refering to?
http://www.ato.gov.au/content/downloads/NAT2036e2004.pdf
I’ll print it out and have a read tonight.
Do you know if there are any forms on the ATO website which list the items you can claim depreciation on (also in regards to the first 5 yrs of ownership)?
I know some people say you can still find positively geared properties around perth, though I feel the capital growth of these areas isn’t that strong – therefore I’m considering this option as a way to get a property in an area with stronger capital growth – without having to contribute alot to it out of my pocket!
Wayne Leech
*Below are links to my websites – any feedback, comments would be appreciated:)
http://www.landsearcher.com.au – List your land for FREE (Private sellers only)
http://www.homesearcher.com.au – List your property for FREE (Private sellers only)Hi Wayne,
Almost – you missed by a year. Here is teh correct link – it’s largely just the dates that are different.
http://www.ato.gov.au/content/downloads/n2036-03-2004.pdf
Not sure about a depreciation schedule as such – all I can recommend is a search on the ATO webiste – I do think (from memory) that the Rental Guide has a list of depreciable items and the length of their effective life.
As for the book – nah – writing is not a strength of mine – rather talk about it to people.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
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