Can someone please tell me how depreciation works to turn a property into a positive cashflow one ? How much can one claim
as depreciation ?Let me give you a scenario
Interest costs $29000 pa
Other property expenses $6500 pa
ie. total costs $35500Rent $18500 pa
Depreciation $17000Will this mean a positive / negative cash flow if income is around
$65000 pa ?Thanks heaps
Depreciation comes in two forms
Capital building Writeoff usually claimed at 2.5% of building cost on recently built properties.
Other
is Fixtures in a house like a new kitchen, hot water service, Vinyl floor, carpet ect , have different levels of depreciation which can be found at
http://www.ato.gov.au/individuals/content.asp?doc=/content/66031.htm
http://www.ato.gov.au/individuals/content.asp?doc=/content/66033.htm
http://www.ato.gov.au/individuals/content.asp?doc=/content/31258.htm&pc=001/002/002/010/005&mnu=1009&mfp=001/002&st=&cy=1
or through a quanty surveyor or accountant.Comments are of a general nature and may not be relevant to your individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Hi Duckster
My accountant told me that a kitchen was a capital cost and was subject to the building write off (2.5%); even an oven if it was built in was depreciated at 2.5%. but a freestanding stove, dishwasher etc all came in under the fixture/prime cost depreciation of varying amounts. Can you clarify, as I been doing my sums thinking that new kitchens would be depreciated over 40 years. I couldn’t find the kitchen listed in the ATO’s guide. Appreciate your advice.Julie Fisher
Daryl Fisher HomesThank you Ducktser for pointing me in the right direction.
I really love the ease of using this Forum
Julie, kitchens are building i.e.2.5%.
$17,000 depreciation Cherry Pro? That must be a pretty flash property. Where did you get that figure?
ScottTax Depreciation Schedules
Australia wide service
1300 660033
[email protected]
http://www.depreciator.com.auCherry Pro, just thinking a bit more about this:
Interest costs $29000 pa
Other property expenses $6500 pa
ie. total costs $35500Rent $18500 pa
Depreciation $17000I think you might be a bit confused. Depreciation is just another ‘outgoing’, or cost. It’s a tax deduction you treat the same as rates, management fees etc.
But it is a ‘non-cash deduction’. With rates, for example, you pay out money every year and then try and claim some back. With depreciation, you locked in your entitlement when you bought the property. So all you do every year is claim that depreciation.
Give me a call if that doesn’t make sense.
ScottTax Depreciation Schedules
Australia wide service
1300 660033
[email protected]
http://www.depreciator.com.au
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