The Block 2012 triggers gold mine fever return to South Melbourne as investors seek depreciation windfalls
It was during the 1850s Victorian gold rush that a tent city known as Canvas Town was established in what's now known as South Melbourne. The area was home to tens of thousands of migrants, particularly from Ireland and China, who having disembarked were soon off to seek their fortunes in the central Victoria goldfields.
Some 160 years it's property speculators who are homing in on the four Dorcas Street, South Melbourne terrraces from the hit Channel 9 reality television show The Block 2012.
"They are an underlying investor’s goldmine," according to BMT Tax Depreciation boss Bradley Beer.
BMT has identified significant deductions available to property investors bidding at the June 30 auctions.
All four listing agents have used the reports in their pitch to convince investors to be among the buyers.
The depreciation reports have been prepared by BMT Tax Depreciation Quantity Surveyors, which have inspected the older properties – now renovated – and estimated what a buyer could claim in deductions in his or her tax returns.
The four properties were purchased for an average of $950,000 each, and BMT has ascertained over $700,000 a terrace has been spent in additional works.
“If an investor is to purchase one of these properties for the anticipated $1.1 to $1.2 million, they represent great value based on the overall expenditure,” says Beer.
The tax depreciation schedule advises purchasers could claim over $30,000 in deductions during the first full year leading to a cumulative total of $140,000 in the first five years of ownership.
BMT Tax Depreciation prepared the property depreciation reports for The Block’s 2011 offerings, which the investor buyers will use in their current financial year tax returns.
But research shows that 80% of property investors fail to take full advantage of property depreciation, Beer says.
“They are missing out on thousands of dollars in their pockets,” he says, as the Australian Taxation Office allows property owners to claim depreciation over items that wear out as a tax deduction.
Depreciation can only be obtained by property owners who obtain income from their property.
The four terraces would need to fetch well above their price estimates to break even, but the television series is content to make its money from big advertising revenues.
