Tax Depreciation [for] Brand-New Houses
If you’re looking for property that gets you the biggest tax deductions…in the quickest time possible…Brand New houses are the answer
That’s because everything – excluding plants, turf and earth – are tax deductible
But it’s not the case for existing houses…even if they’re only 9-months old.
You see, existing residential properties can only claim the deductions for the structural elements (div 43).
…Not the ‘plant and equipment’ items (div 40).
Here’s how that looks…
I recently worked on a new duplex pair in Brisbane’s north. One unit was rented out from brand new, while the other was lived in by the builder for the first 9-months, then rented out.
Both are very similar in every way.
Both are 3-bed, 2-bath, 1 car.
Both have similar floor areas (within 5sqm of eachother)
But the outcomes were very different.
Brand New House
Tax Deductions of $16,406 in 1st year
Near-New House
Tax Deductions of $8,006/yr
Brand New House
$63,925 in deductions in 5 years
Near-New House
$40,030 in deductions in 5 years
Here’s a detailed breakdown of what you can claim deductions for in a brand new house…
Capital Works items (div 40)
Note: all Capital Works items are claimed at 2.5% pa for 40-years (equals 100%)
- House structure
- Patio & Pergola
- Tiling
- Driveway
- Fencing
- Retaining walls
- TV antenna
- Clothes line
- Letterbox
- Swimming pool
- Garden shed
- Garden edging
and so on…
But you can’t claim…
- The mulch
- The plants
- The turf
- The soil
Plant and Equipment Items (div 43)
Note: each item has its own effective life – as determined by the ATO.
So the rates of depreciation range from just 3.33% for a Passenger Lift – right up to 100% for smaller items with a value of less than $300
- Oven
- Cooktop
- Rangehood
- Dish washer
- Microwave
- Carpet
- Floating floors
- Fans
- Air conditioners
- Lights (not downlights, they’re Capital Works items)
- Hot Water Systems
- Rainwater tanks
- Pumps
- Blinds & curtains
- Smoke detectors garage door motors
- Remote controls
- Bins
- BBQ’s
and so on…
Here’s how successful some recent clients have been with their Brand-New investment properties…
Park Ridge Brand New House
$18,773 in 1st year
$71,925 in 5 years
All original
Marsden, Brand New Dual Key House
$26,849 in 1st year
$77,320 in 5 years
All original
Northgate Brand New Unit
$17,544 in 1st year
$68,465 in 5 years
All original
Pimpama Brand New House
$16,250 in 1st year
$62,514 in 5 years
All original
North Lakes 2011 Built House
$5,438/yr in first year
$27,190 in 5 years
Minor renovations
Strathpine Brand New House
$14,184 in 1st year
$55,338 in 5 years
All original
What to do next…
To find out how much tax you’ll save get in touch for a free assessment of your property.
Simply use the form below. It’s fast and it’s free
Get Your Free No-Obligation Quote Here
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“Will has done our depreciation report.
He’s honest, quick and professional.
Highly recommended”
Hamad Marzouq
Outstanding Service
“We asked quotes from 4 mobs – Will replied to us first – with a detailed quote and competitive price. While one bombarded us with marketing emails, and 2 did not even bother to ring or email us back. Everything was settled smoothly and on time with WRC. Will is very professional yet personable and easy to communicate with. We highly recommend WRC Quantity Surveying. Outstanding service”
Childers Oasis Motel
Extremely satisfied
“WRC Quantity Surveying was recommended to us to complete a depreciation tax report for our rental property. Will was very prompt & efficient with doing this report. Extremely satisfied with his service & would highly recommend WRC Quantity Surveying!”
Christine Barlow
Still have some questions?
…maybe these FAQs will help you
QUESTION: When Should I Get A Tax Depreciation Report?
The best time is as soon as you take ownership of the property.
QUESTION: Can I Get A Report For An Apartment?
Yes.
In fact, apartments are ideal for tax depreciation. That’s because the cost per square metre to build them is often 2 even 3 times more than a normal house.
That means bigger tax deductions for you
QUESTION: What Does My Accountant Do With My Depreciation Report?
Your accountant will mark-off the depreciation values as an ‘on paper loss’ against your rental income.
For you, that means less tax to pay
And should the deductions be greater than the income produced, your accountant will mark-off these surplus losses against other income sources (usually your job).
…this is known as Negative Gearing.
Once again, this means less tax to pay.
