How does tax depreciation work with a new home?

Date Tuesday, 25 October 2016 12:00 AM

It might not be the most exciting pair of words, but tax depreciation can be a real financial boon to anyone who builds or buys a new property. Interested? Here's how it can work for you:

What is tax depreciation?

Tax depreciation is a useful tool used by property investors to recover lost capital over the lifetime of their real estate. It is essentially a tax benefit that works on the assumption that certain things in your rental are going to lose value over time. The curtains, the carpets, things used in the daily life of your tenants that will depreciate. It also applies to the physical bricks and mortar of the property itself.

A new home could be great for plumping up your investment portfolio.A new home could be great for plumping up your investment portfolio.

Let's say you've just bought some new curtains for your rental, valued at $200. Over the next few months, they might start losing value, because they have been used. When it comes to tax time, they might be worth $150 now. You can claim the difference against your income as an expense, reducing the total tax that you pay.

Through this method, that new residential house you've built with G.J. Gardner Homes might save you tens of thousands of dollars over five years, according to BMT Quantity Surveyors.

Working tax depreciation into a new home

That new residential house you've built with G.J. Gardner Homes might save you tens of thousands of dollars.

So how will that affect a new home? This is where depreciation can really work it's magic. When you buy an established property, the building and the items in it will have already gone through some depreciation - meaning you've missed out on that tax break. But with a new home, you get every cent of it, as long as you are working from the correct depreciation schedule - speak with your property manager to find out more about those!

That's why off-the-plan and new builds can be so lucrative for investors, both new and experienced. They give you access to use tax depreciation to the fullest extent, meaning you have more funds to sink back into further property - or simply into your personal life!

There are plenty of other good reasons to invest in a freshly built home; and it's not all just about tax! To discover just a few more, check out the rest of the G.J. Gardner Homes blog, or get in contact with us today to discover a range of home designs or home and land packages.

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