Depreciation - New property

No. It's better than that.

Of that $170K, let's say $155K is for the building itself. You depreciate that at 2.5% (= $3,800).

The remaining $15K would be the Assets (fixtures and fittings). Things like stoves, carpet, air cons etc depreciate more quickly than the building.

Of that $15K, you might be able to depreciate, say, $3-4K in the first year. Year 2 it would be similar. Year 3 less and so on.

So your total claim in the first full year might be around $7K.

These are just rough figures of course.

Scott
 
Hi, further to Scott's excellent answer, also be aware that if the builder is also charging you for soft landscaping items then these may need to be excluded.

I would expect that the builder should provide you with a summary of what they are charging you for. This should let you know the amount spent on actual construction and the amounts spent on various fittings and the amounts spent on non-deductible items such as the above.
 
Blood from the tax stone...

Hi Everyone, we have generally built brand new properties, one of reasons was to take advantage of depreciation and assisting with cash flow while the properties edged towards break even territory.

We have reduced our tax bill by around 30%-40% by doing this. I would really appreciate hearing from the forum on any additional strategies which have been utilised successfully to reduce their tax payments further..whats the lowest people have got to?

Cheers

Henry
 
No. It's better than that.

Of that $170K, let's say $155K is for the building itself. You depreciate that at 2.5% (= $3,800).

The remaining $15K would be the Assets (fixtures and fittings). Things like stoves, carpet, air cons etc depreciate more quickly than the building.

Of that $15K, you might be able to depreciate, say, $3-4K in the first year. Year 2 it would be similar. Year 3 less and so on.

So your total claim in the first full year might be around $7K.

These are just rough figures of course.

Scott
That's odd from a professional. Builder's profit cannot be depreciated.
 
That's odd from a professional. Builder's profit cannot be depreciated.

What an odd error for someone who has been around this place for so long.

Developers profit can't be included.

And if a spec builder builds a house and sells it, his profit can't be included if a subsequent investor buys the place.

But if someone pays AV Jennings (or whoever) to build them a house, that builder's profit can be included.

Scott
 
We have reduced our tax bill by around 30%-40% by doing this. I would really appreciate hearing from the forum on any additional strategies which have been utilised successfully to reduce their tax payments further..whats the lowest people have got to?

Hi, many investors don't pay any tax at all. Depreciation is one way of getting that result. Another is spending more than they earn.

Other investors pay a lot of tax. This is because they prefer making a profit instead.


That's odd from a professional. Builder's profit cannot be depreciated.

Hi, similar to how a bank's profit cannot be claimed when calculating the interest expense?

I presume that 'ILoveProperty' is not an owner/builder as he is purchasing the building from AV Jennings therefore he would base his capital works and depreciation deductions on the figures provided by the builder. His cost of construction is what he paid the builder, not what the builder paid for their materials and staff.
 
We have reduced our tax bill by around 30%-40% by doing this. I would really appreciate hearing from the forum on any additional strategies which have been utilised successfully to reduce their tax payments further..whats the lowest people have got to?

Got it close to zero by havong almost no income - but it meant we were living shall we say "extremely frugally".....

Cheers,

The Y-man
 
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