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Advice for a newbie.... the value of depreciation schedules...

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  • Advice for a newbie.... the value of depreciation schedules...

    Hi, I am a newby
    I am looking at equity release on a first investment property. In your opinion what value do you place on the depreciation schedule if all other values are roughly even. I ask this because I am not looking at an aggressive investment here. My suburb has houses around $300k-$350 that typically return 5.5% gross. Vacancy rates are currently 1.7% which is good but there has been little capital gain in a while (Wodonga) although the town keeps growing with many subdivisions on the move. Median price $287,500, Annual capital growth 2.83% and with plenty of new stock it makes more sense to me to buy a near new home to take advantage of the good depreciation schedules they offer. I don't think there is value in renovating or value adding to a 10 yr old+ home since a new house and land package start at around $300k and our demographic seem to want new. However the 10 year old stock are larger homes often on larger blocks and will get you a second living area. If both new and older homes fetch around 5.5% ROI gross, do the new homes represent a much better investment given their depreciation schedule? I am simply looking for something that can pay for itself at this stage.

    Many thanks

  • #2
    Hi Felltimber
    If you buy a property built after 1985 a Depreciation schedule is worthwhile arranging. The Dep'n schedule allows you to claim 2.5% of the building cost and you can also write off the properties fixtures and fittings (e.g. curtains,carpets, tv ariel, etc). Where the building (not including the land cost) cost say $200k you will have a $5k tax deduction for the next 40 years.
    So this is an extra deduction to include in your investment scenario.