NBtax Tax Bites

Suburban Delight for Investors at Tarneit in Victoria

New homes in regional hubs are delivering excellent results for investors both in terms of rental returns and depreciation benefits. 

The population growth in many states has meant redevelopment of former agricultural or industrial land into thriving masterplanned satellite communities. Tarneit, a western suburb of Melbourne, is an excellent example. The area features many new free-standing owner-occupied homes as well as investment properties catering for families seeking affordable housing.  

With a bustling population of well over 40,000, residents of Tarneit comprise a mix of young couples with families, established families and older people from diverse cultural backgrounds. New housing estates throughout the district provide a range of contemporary low maintenance homes. 

The average three-to-four-bedroom house costs $617,500 and rents at $385 per week. While a two-bedroom unit will cost on average $416,000 and rents at $350 per week. (Source Real Estate.com)

This depreciation case study reviews a new home built in Tarneit as an investment property for our clients. The property is in a master planned community and features four bedrooms, three bathrooms, open plan kitchen with lounge and dining room, opening onto a patio, plus a two car lock up garage, and garden area. 

The property is eligible for depreciation allowances for both the Building and Plant & Equipment assets for Divisions 43 and 40. 

In preparing our detailed depreciation schedule, our NBtax Property Inspector thoroughly reviewed the property and its assets to determine their value based on quality and the existing condition.  

For this property, we found depreciation deductions for the following assets:

• Blinds
• Carpets
• Air conditioning 
• Kitchen appliances – dishwasher, exhaust and range hood, stove
• Solar hot water system 
• Gas ducted central heating 
• Security systems and equipment 
• Artificial grass and matting 
• Fire control and alarm systems 
• Ventilation fans 

Based on construction costs for the building, plus the fittings and fixtures, our NBtax team has calculated a total of $18,306 in depreciation deductions for the first full financial year. A further $324,729 in deductions can be claimed by our clients over the next 40 years. 

This is a substantial amount of depreciation deductions that will help our clients to offset rental income in their taxes.