Washington Brown has created Australia's first and only tax depreciation calculator that allows you to estimates the potential depreciation deductions before you buy a property.
All you do is punch in the expected purchase price of the property, and based on a collection of real life analysis, an estimated depreciation amount is calculated.
But what if you are building a house - what are the likely depreciation deductions then?
Unfortunately, there's no calculator on the market that can make this estimation, so in this month's QS Corner I've created a "ready reckoner" to help estimate the potential depreciation on the construction of an investment property.
So if you are thinking about engaging a builder to build your investment property here are the percentages you can use in relation to your construction contract value.
Year 1: 6%. Year 2: 4.5%. Year 3: 4%. Year 4: 3.75%. Year 5: 3.5%.
That means...if my house cost $200,000 to build, I could expect a $12,000 depreciation deduction in Year 1, and a $9,000 deduction in Year 2....etc.
This guideline is best used for construction costs less then $500K. Any higher and the ratio's are likely to decrease. So if you need further clarification, don't hesitate to contact us.
Tyron Hyde is a director of quantity surveying firm Washington Brown. For more QS Corner tips and information on property depreciation including a FREE online tax depreciation calculator, visit www.washingtonbrown.com.au
