INVESTOR CASE STUDY


END OF FINANCIAL YEAR TAX RETURN TIP FOR MORE MONEY

The difference a depreciation schedule can make to your cash flow?

Case study example: A new three-bedroom house @ $600,000

Ian purchased a new three-bedroom house for $600,000 just over one year ago.  He rented his property and received a rental income of $545 per week, or $28,340 per annum.  The expenses on the property for interest, rates, management fees and maintenance costs totalled $39,067.  Towards the end of the first year of owning the property, Ian’s annual after-tax outlay amounted to $6,758 or $130 per week.

At the end of the financial year, Ian contacted his tax depreciation expert, who completed a thorough site inspection and provided a detailed tax depreciation schedule for the property. The schedule showed that Ian could claim $11,200 in depreciation in the first full financial year alone.

The following table shows Ian’s scenario both before and after, tax depreciation was claimed. By claiming depreciation, Ian reduced his annual outlay for the property to $2,614 per annum or $50 per week. This was a difference of $80 per week in Ian’s pocket or $4,144 for the first full financial year.