Rental Property 82 Moffat Road, Taringa, QLD, 4068.

On 15 August 2020, Lindsey signed a contract for the purchase of a three-bedroom house in Taringa in his own name at a cost of $1,260,000 subject to a 30 day settlement period in which Lindsey needed to secure financing and conduct inspections.

Lindsey was then able to obtain a loan of $1,000,000 from NAB at a fixed interest rate of 3.00% per annum and had sufficient savings to pay for the balance of the purchase price as well as various other settlement costs.

Upon settlement of the property on 14 September 2020, stamp duty and legal fees relating to this acquisition totaling $42,640 were paid on this date as well as loan establishment fees of $5,150 were charged and paid. The term of the loan is 25 years.

During his inspections, Lindsey was provided with a detailed construction/depreciation schedule from the previous owner. The report prepared by Napier & Blakely Quantity Surveyors shows that the house was originally constructed in December 2014. The schedule confirms that the original construction cost of the house was $414,000.

The house has been permanently rented out since 14 September 2020 (ie. 41 weeks) and Lindsey has received gross rental income of $36,900 for the current income year.

Expenses relating to the rental property for the 2021 income year were as follows:

$

• Building inspection report (incurred prior to purchasing the apartment) 1,120
• Cleaning 625
• Council rates 4,826
• Landlord insurance 1,446
• Interest on NAB loan (from 14 September 2020 to 30 June 2021) 23,836
• Property agents commission (on rent collected @8.5%) 3,136
• Repairs and maintenance (all tax-deductible) 313
• Travel to and from the rental property to inspect prior to purchase 72
• Travel to and from the rental property to inspect after purchase 124

As outlined above, interest on the NAB loan for the period 14 September 2020 to 30 June 2021 totalled $23,836.

On 27 June 2021, Lindsey received a letter from NAB offering him the option of prepaying an additional two months interest on the loan (for the months of July and August 2021).

As Lindsey had surplus cash available, he accepts the Banks offer. He prepays the additional two months interest totalling $1,215 to NAB on 30 June 2021. This additional interest prepayment is not included in the figure of $23,836 shown on the previous page.

The property was rented out partially furnished. On 19 November 2020, Lindsey purchased several items for the benefit of his tenants. These items are detailed as follows:

$

• CCTV Camera and Monitor (security system) 4,680
• Portable Vacuum Cleaner 214
• Cooktop 2,802
• Ceiling Fans 1,788

When the property was initially purchased, it was obvious that the fence surrounding the house was badly in need of repair. The fence was literally about to fall down.

Lindsey engaged the services of a local fencing contractor to replace the entire fence surrounding the property. The fencing contractor charged Lindsey $12,150 for this full service and Lindsey paid this fee on 19 October 2020.

Lindsey chooses not to allocate assets costing between $300 and $1,000 into a low-value pool. Instead, he prefers that you depreciate any depreciable assets purchased in accordance with their effective lives as set out by the Commissioner of Taxation in Table A of Taxation Ruling TR 2021/3 (refer to Residential Property Operators 67110).

For Division 40 purposes, Lindsey wishes to use the diminishing value method (wherever possible) to maximise any depreciation deduction claimed.

For Division 43 purposes, Lindsey wishes to use the prime cost method.