Investors can further boost their cash flow by taking advantage of the many depreciation deductions available from their childcare centre investment.
Demand for childcare centres has increased in recent years due to high rental yields, strong growth and lucrative depreciation deductions.
While some believe there is oversupply in the industry, childcare centres are still proving to be a profitable investment.
Suburban areas that are popular among families are a usual hotspot, with the 2019 sale of an Artarmon childcare centre setting a national record of $21 million.
There are several reasons why childcare centres are becoming a popular option for proactive investors looking for the next asset to add to their portfolio.
Social factors such as parents returning to the workforce before their children are of school age, higher birth rates and the growing need for flexibility are contributing to the rising demand.
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Childcare centres are commonly leased out by a tenant on a long-term agreement, lasting between five to ten years.
During this time, they produce positive rental yields and continue to be a profitable asset to an investor’s portfolio.
Investors can further boost their cash flow by taking advantage of the many depreciation deductions available from their childcare centre investment.
BMT Tax Depreciation has prepared many depreciation schedules for childcare centres, uncovering thousands of dollars in deductions over the life of the property.
From artificial grass to kitchen equipment,many depreciable items are found in childcare centres that owners can claim.
Tenants can also benefit from the available depreciation deductions of their fit-out equipment, such as furniture, toys and other play equipment.
Childcare centre case study
The owner of a childcare centre owns several plant and equipment assets, all of which have available depreciable value. The owner has chosen to use the diminishing value method to claim depreciation.
Source: BMT Tax Depreciation
In the first financial year alone, the owner can claim $25,475 worth of depreciation deductions for their plant and equipment.
In the cumulative five years of owning the investment, the depreciation claims total $71,670.
As you can see, property depreciation can make a significant difference by improving an investor’s after-tax position.
To find out the depreciation deductions available on your childcare centre, contact the specialist BMT Tax Depreciation team on 1300 728 726 or Request a Quote today.
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