Expert Advice: by Tyron Hyde
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
To read more Expert Advice articles by Tyron Click Here
Disclaimer: while due care is taken, the viewpoints expressed by contributors do not necessarily reflect the opinions of Your Investment Property.
Whether you are looking to buy your first home, move home, refinance, or invest in property, a mortgage broker can help. Access loans from all the major lenders, get help with paperwork – plus there is no charge for this service. Get help from a local mortgage broker
Top Suburbs :