New Residential Investment Property
New property like a new car tends to attract more tax depreciation benefits. In this case, construction of the house, internal finishes, carpets, flooring, and other assets all contribute towards tax depreciation, resulting in more tax depreciation in comparison to older properties.
Remember to watch out for the quality of build and finishes. The better the quality and build, the more tax depreciation you can deduct.
Tax savings over 10 years: $77,963
Case Study – New House and Land
Purchase price: $435,000
4 bed, 2 bath, double garage
Depreciation starts from the settlement date of your property. If you do not start to claim for depreciation when you first make it available for rent, you might lose the opportunity to claim depreciation from those first few years. It’s those first few years where the largest proportion of tax depreciation can be claimed.
New properties have significantly more tax savings in those first few years in comparison to older properties.
Annual tax savings and capital gains tax
How your assets are accounted for can affect, not only your annual tax savings, but the future capital gains tax when you sell your property.
Specifically, the proportion of plant assets and build capital depreciated in your property will affect your future capital gains.
New property tends to have more depreciable plant assets which would improve annual savings and potentially have less impact on your future capital gains tax.
Our schedules clearly show you the split between these two ATO defined categories.
Speak to your accountant or one of our depreciation experts to learn more.
Turnaround time to receive a depreciation schedule: from 2 business days