Depreciation of furnished properties



From: Anonymous


can some one please help me with directions in regards to the Depreciation of furnished properties.

i got this idea (i don't think this is new, anyhow) where i would let the tenant TV, DVD player and white goods.

but how does depreciation work in this situation? percentages and time frames?

can someone let me know where this information is available or if this is really possible?

further thought... my friend and i was thinking of buying units next to each other and furnishing them so we can rent from each other. so we can both have what we want and get the tax man to help pay for it.

is this possible


newbie investor

fantastic site!!!! thank you all for sharing your thoughts
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Reply: 1
From: Michael Croft


Allan Edwards and Henry Kaye both push the idea of gadgets for tenants. Anything goes; cars, spa memberships, projection units, you name it. Whatever gets the rent up, the tenants in and vacancy factor down.

Some of the items can be written off in as little as 24 months.

Your mate and you could buy adjoining units, rent them at over the market rates, get a valuation based on the rental returns, realise the increased equity and put those equity dollars in your pocket. All legal and above board.

Anything else?

Michael Croft
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Reply: 2
From: Les .

G'day Anon,

Re depreciaton, I don't KNOW, but I would think that depreciation wouldn't be any different from the normal. Check out the ATO website - it has some useful stuff there, and they are the ones calling the shots anyway -

Re the "dual units" - take a look at story 79 in Jan Somers "Building Wealth - story by Story" (or, is that where you got the idea from? ;^)



- "Eschew Obfuscation" - ;^)
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Reply: 3
From: Michael G


Double unit thing, did that. Some tips...

#1 ensure your friend is like-minded. Different viewpoints can change the equation later on, they want to do this, you don't etc.

#2 work out your exit clause - how long will you each rent for?, what if one has to pull out quickly. Ie stick to it for 1 yr 2yrs??

#3 watch out for spouses, boy/girfiends etc they wont necessary be like-minded see item #1.

#4 units are good - I used a duplex and gardens are a hassle, units sound better, body corporate can worry about stuff like that.

#5 fixed appliances, upgrades, consider how you will handle - installation of stuff like air-con, painting walls, blinds, etc. Will you both buy at the same time thus improving your buying power, but what happens if one doesnt want/can't spend the money right away.

#6 get it in writting. You may not be able to have a contract that binds you to live in each others units, that's why you put all these clauses into a lease. It will do the job as good as any other contract.

#7 Use a property manager - best way to keep it arms length and proper commercial value.

For me it helped my cashflow and improved my debt serviciability ratio as I was investing.

Of course, always see your accountant, and if problems persist, see a different one!

Michael G.
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Reply: 3.1
From: Nelson .


Does the double unit/duplex strategy apply to immediate family members? ie. I rent my brother's and he rents mine? Is there a ruling against that?


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Reply: 3.1.1
From: Michael G


As with everything, its intention, not advice mind you, but in such a scenario (which you would need to speak to appropriate advisors), an agent would much improve the arms length side of the deal.

Michael G.
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