Determine Your Depreciation Before You Purchase

BEFORE PURCHASING a commercial investment property, you should first crunch the numbers. That’s because the property will provide an even better return, once depreciation is claimed. 

Savvy investors will usually consider the potential return of the property, the surrounding commercial infrastructure, along with the vacancy rates in the immediate area. 

However, often investors will fail to consider the financial benefit of claiming depreciation deductions – prior to making their purchase.

The following example shows how one commercial property investor identified an improved annual cash flow of $16,679 … just by claiming property depreciation.

Setting the scene

This property investor was considering purchasing a commercial office building for $930,000. Some preliminary research (and advice from a property manager for a rental appraisal) helped confirm an expected rental income of $49,400 per annum. 

From there, expenses including … interest, property management fees, rates, repairs and maintenance costs came to a total of $60,450 per annum.

Then, a specialist Quantity Surveyor provided a free assessment of the likely tax deductions expected from the property – revealing a claim $45,080 in depreciation for the first full year. 

It’s important to note that the commercial property in the table below was purchased by the property investor, not a company. 

Without claiming depreciation, the property investor would experience a loss of $6,961 per annum during the first year of owning the property.

However, by claiming depreciation, the property owner would receive a positive return of $9,718 during the first year of ownership. 

AS you can appreciate … if you crunch your numbers prior to making a purchase, you will gain a far better perspective on the affordability of the property and its future cash-flow position. 

Once you purchase the property, a specialist Quantity Surveyor can prepare a tax depreciation schedule to ensure all deductions are maximised. 

Bottom Line: BMT Tax Depreciation specialise in maximising depreciation deductions for property investors Australia-wide. By requesting a Tax Depreciation Schedule, you can boost your cash flow position and save thousands of dollars every year. 

That schedule outlines all available deductions for your property and lasts forty years. It has a one-off fee and this is 100% tax-deductible will.

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