Wonder Why Display Homes Are Hot Favourites
More and more Australians are investing in display homes Sydney and Central Coast as they deem it as a very attractive option in property investment. A display house is normally built to high standards, maintained impeccably and fetches a handsome rent for certain period of time.
Purchasing display homes Sydney is a bit different compared to regular investment property. You purchase the home on a lease-back option from the builder / developer who retains the home as a tenant for a set period of time (which could range from 1 to 3 or more years) with option for extension, meaning as per the sales agreement the builder can extend the lease if they need to. The display house Central Coast in most likelihood is the most desirable space in the whole development project. It is after all designed to entice investors and buyers and has to reflect the class, quality and workmanship of the designer, developer and builder. Some of the highlights of the display home include extensive landscaping, quality finishes and new improved building techniques. The display house also showcases upgrades available on the standard packages.
Tax depreciation deduction
This is one of the main reasons why investors buy display homes Sydney and Central Coast, there is significant tax depreciation deduction on hand from these display homes. The following example may help you understand better:
The total build cost of the display home (soft landscaping not included) - $160,000
Plant and equipment (includes cook tops, carpets, blinds, ovens, packaged air conditioning) - $30.000
According to tax assessment act Division 43 component would be applicable on the capital allowance of $160,000 and Division 40 Assets would be applicable on plant and equipment items. There will be 2.5 percent return on the division 43 component from the first year which calculates to $4,000 per year. The depreciation on the assets or plant and equipment is calculated at different rates - for assets valued below $301 it is 100% and the percentage of depreciation decreases up to 13.33 percent on different ranges. So calculating on the diminishing method the depreciation for the first year comes to $5,423.
As you can see in the very first year there is a total tax deduction of $9,423 on depreciation. This of course is just a rough estimate to give you an idea on what would be the potential deduction on standard display house Sydney and Central Coast. There is also the added benefit of high yield; the current yield ranges between 7.5 to 8 percent claim some of the builders which by any standard is pretty high. So now you know why display homes sell like hot cakes.
Purchasing display homes Sydney is a bit different compared to regular investment property. You purchase the home on a lease-back option from the builder / developer who retains the home as a tenant for a set period of time (which could range from 1 to 3 or more years) with option for extension, meaning as per the sales agreement the builder can extend the lease if they need to. The display house Central Coast in most likelihood is the most desirable space in the whole development project. It is after all designed to entice investors and buyers and has to reflect the class, quality and workmanship of the designer, developer and builder. Some of the highlights of the display home include extensive landscaping, quality finishes and new improved building techniques. The display house also showcases upgrades available on the standard packages.
Tax depreciation deduction
This is one of the main reasons why investors buy display homes Sydney and Central Coast, there is significant tax depreciation deduction on hand from these display homes. The following example may help you understand better:
The total build cost of the display home (soft landscaping not included) - $160,000
Plant and equipment (includes cook tops, carpets, blinds, ovens, packaged air conditioning) - $30.000
According to tax assessment act Division 43 component would be applicable on the capital allowance of $160,000 and Division 40 Assets would be applicable on plant and equipment items. There will be 2.5 percent return on the division 43 component from the first year which calculates to $4,000 per year. The depreciation on the assets or plant and equipment is calculated at different rates - for assets valued below $301 it is 100% and the percentage of depreciation decreases up to 13.33 percent on different ranges. So calculating on the diminishing method the depreciation for the first year comes to $5,423.
As you can see in the very first year there is a total tax deduction of $9,423 on depreciation. This of course is just a rough estimate to give you an idea on what would be the potential deduction on standard display house Sydney and Central Coast. There is also the added benefit of high yield; the current yield ranges between 7.5 to 8 percent claim some of the builders which by any standard is pretty high. So now you know why display homes sell like hot cakes.
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