How can you work out if a property is positive cash flow.
Hey Captain.
From the rent, deduct interest + rates+ insurance. You may also want to allow for repairs also. Don’t forget that you can claim depreciation which helps you out too.
Cheers
MartyHello
Maximus and thankyou.To be precise, is there a calculater to work this out. How do I know the value of these costs??.
e.g. I know that I must get a property built after July 1988 to claim the construction costs but how do I know what that cost is without is getting the property valued. and so on.
Some one out there must a this in calculated for a novice
Forgive me, if I sounf dumb, but this is my first time.
Captain
Hey Captain.
From the rent, deduct interest + rates+ insurance. You may also want to allow for repairs also. Don’t forget that you can claim depreciation which helps you out too.
Cheers
MartyHey Captain,
Like a few people here i am pretty new to investing. I have been a member of this site for the last 5 months and just in the process of purchasing my first property.
My way of thinking is that i dont take depreciation costs into account in my number crunching.
To me thats the icing on the cake.
I prefer to see positive cashflow before depreciation rather than after.Well thats my 2 cents worth.
Happy hunting Cap,
regards
Alex[8D]
Hello
Maximus and thankyou.To be precise, is there a calculater to work this out. How do I know the value of these costs??.
e.g. I know that I must get a property built after July 1988 to claim the construction costs but how do I know what that cost is without is getting the property valued. and so on.
Some one out there must a this in calculated for a novice
Forgive me, if I sounf dumb, but this is my first time.
Captain
Hey Captain.
From the rent, deduct interest + rates+ insurance. You may also want to allow for repairs also. Don’t forget that you can claim depreciation which helps you out too.
Cheers
MartyHey Captain,
Let me say it is so good to have access to one with so much knowledge about property investing. Given that I also consider myself to be a novice and you are so willing to help out us newbies, are you able to help me out with this one?? My understanding or misunderstanding about depreciation is that a property is depreciated at a greater percentage for the first 5 yrs of its life eg. 1st yr 5%
2nd yr 4.7% 3rd yr 4.2% and so on. When a house is older than 40yrs it can still be depreciated at 2.5% Is this all true or not???Hwy sebastian,
Firstly having the property valued will not reveal the construction costs of the property unless by some chance the vendor has kept all records from there purchase and is willing to allow you to view these documents. A quantity surveyor will be required to calculate construction costs which if built say 10 years ago would be substantially lower than construction costs at todays prices.
Basically the property component (building) can be depreciated over 40 years at 2.5% of construction costs from the date of completion of construction. This is for a property constructed after 15th Sep 1987. More detailed info on capital works deductions can be found on the ATO website. ato.gov.au
Properties over 40 years old cannot be depreciated. Not that they would be worth it anyway a property probably only cost $500 to build back then [
]If the property is less than 5 years old you will also be able to claim depreciation on the chattels over 5 years from date of instalation at varying rates of diminished value.
Cheers.
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