BEFORE PURCHASING a commercial investment property, make sure you crunch the numbers. The property may be more affordable if the right depreciation is claimed.
Savvy investors will usually consider the potential return of the property, surrounding commercial infrastructure along with rental vacancy rates in the immediate area.
However, investors will often 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 additional yearly cash flow of $16,692 merely by claiming property depreciation.
The property investor was considering purchasing a commercial office building for $930,000. They did some preliminary research and asked a property manager for a rental appraisal, which resulted in an expected rental income of $950 per week, or $49,400 per year.
The investor was also able to work out an estimate of the costs involved in owning the property. Expenses included … interest, rates, property management fees, rates, repairs and maintenance costs – coming to a total of $60,450 per annum.
They contacted a specialist Quantity Surveyor for a free assessment of the likely deductions expected from the property … and found they would be able to 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 $134 per week during the first year of owning the property. By claiming depreciation, the property owner would receive a positive cash flow of $187 per week, or $9,724 in the first year of ownership.
If you crunch the numbers prior to making a purchase, you will gain a far better perspective on the property’s affordability and your future cash flow position.
Once you purchase the property, a specialist Quantity Surveyor can prepare a detailed 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.
Our schedule will outline all available deductions for your property and lasts 40 years. It involves a one-off fee and is 100 % tax-deductible.