DEDUCTIONS CAN BOOST CASH FLOW
Claiming on-paper deductions such as depreciation can substantially improve your net cash flow position. If you’re choosing between two properties in the same area, the one with the better on-paper deductions is the way to go. Depreciation benefits are at their greatest when the property is new, says Tyron Hyde, from Washington Brown. For example, a new apartment purchased in Melbourne for $700,000 could expect about $19,000 in tax depreciation benefits in the first full year. It is important to remember, though, that even properties built before 1985 (when the building allowance kicked in) are worth depreciating. If you had just paid $700,000 for a house in Melbourne that was built in the early 1980s, a first-year deduction of about $6500 is very likely.