For $35 per week, you could own an investment property too

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Compare the Pair – Case study: for $35 per week, you could own an investment property too


Owning an investment property can be far more affordable for potential investors than they think, particularly when they claim all of the tax deductions available to them.

To explain how claiming these deductions can assist an investor to purchase a property, let’s examine the situation of two average Australian taxpayers; Bill who feels he currently is unable to afford an investment property and Kate, who owns one investment property.

What deductions can be claimed?

The Australian Taxation Office allows income producing property owners to claim a number of deductions for expenses involved in holding a property including property management fees, rates, interest, repairs and maintenance.

Investors are also entitled to a non-cash deduction for the wear and tear which has occurred on the structure of the building and the assets contained within the property over time. This deduction is known as property depreciation.

Bill and Kate’s scenario

Bill currently does not own an investment property though he would like to. He believes the cost of owning an investment property is not within his current budget.

From his $85,000 salary, he pays $20,707 in taxes after he claims basic expenses such as a clothing allowance, donations and general accounting fees.

Kate earns the exact same salary of $85,000. However, she saved a deposit and purchased a three bedroom rental property for $600,000 just over one year ago. Her property is rented at $545 per week, a total rental income of $28,340 per annum. The income earned from Kate’s investment property is also taxable, therefore her total combined income equals $113,340.

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In addition to the same basic expenses Bill claimed, Kate is able to claim deductions for expenses involved in holding the property, including management fees, insurance, rates, interest, repairs and maintenance. These expenses for a typical three bedroom property would amount to around $39,067. Kate also spoke with BMT Tax Depreciation and obtained a depreciation schedule which showed she could claim an extra $14,200 in depreciation deductions in the first financial year.


The following table compares the pair and shows their before and after tax situations:

BMT Graph

The depreciation deductions in Kate’s scenario have been calculated using the diminishing value method and are based on the first financial year of ownership. This is a generic example only. Every person’s position is different. BMT are not Accountants or Financial Advisors and recommend that you seek independent advice.

As you can see, Bill’s take home income after he pays $20,707 in taxes is $63,293. Although Kate earns the same take home wage and is in a similar financial position to Bill, her income producing property also entitles her to claim a total of $53,267 in deductible expenses including depreciation. This further reduces her taxable income to just $59,073 making her income tax payable $11,814.

By maximising the deductions she can claim due to holding her property and claiming depreciation, Kate’s take home income is only a difference of $1,834 per year. Therefore, her property is costing $35 per week to own after tax.

Investors thinking of purchasing a property should always obtain expert advice from a Specialist Quantity Surveyor on the depreciation deductions that will be available to them once they purchase a property.

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Article provided by BMT Tax Depreciation.
Bradley Beer (B. Con. Mgt, AAIQS, MRICS) is the Chief Executive Officer of BMT Tax Depreciation.
Please contact 1300 728 726 or visit for an Australia wide service.

Bradley Beer

Disclaimer: This article contains general information. Before you make any financial or investment decision you should seek professional advice to take into account your individual objectives, financial situation and individual needs.



The material on this website has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained on this website is General Advice and does not take into account any person’s particular investment objectives, financial situation and particular needs. Before making an investment decision based on this advice you should consider, with or without the assistance of a securities adviser, whether it is appropriate to your particular investment needs, objectives and financial circumstances. In addition, the examples provided on this website are provided for illustrative purposes only.

Although every effort has been made to verify the accuracy of the information contained on this website, lnfocus, its officers, representatives, employees and agents disclaim all liability [except for any liability which by law cannot be excluded), for any error, inaccuracy in, or omission from the information contained in this website or any loss or damage suffered by any person directly or indirectly through relying on this information.

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