Cashed-up buyers might be getting a bargain on The Block’s latest reno offerings after experts reveal insane multi-million dollar tax lurks that far outstrip the bloated sticker prices.
If you’re just tuning into the latest season of Australia’s hit home reno show, this year’s Blockheads have been tasked with transforming an abandoned resort into luxury family holiday homes in regional Victoria’s Phillip Island.
In other words, it’s business as usual for Scotty Cam and his army of tradies. But with the nation’s housing market in the shitter and cost-of-living becoming a hot topic around the dinner table, many viewers are wondering if we are going to see the sky-high property prices from past seasons replicated on the small screen.
Well, according to tax experts, we are. And they’re only expected to climb higher.
BMT Tax Depreciation, a firm who have handled evaluations for Block properties for two decades, claims that this year’s tax lurks look to net cashed-up buyers anywhere between $4.4 million to $5.2 million per house, dwarfing the starting sub $2 million price guide provided by agents.
CEO Bradley Beer said these eye-watering figures could even see the “decisive factor” in this season’s hotly anticipated auction, with the incentives pulling in savvy investors.
“Tax depreciation can significantly enhance the investment value of a property,” he said.
“For The Block properties, these potential tax deductions will outweigh the purchase price, offering an exceptional investment opportunity.”
BMT said the Australian Taxation Office allows owners of income-producing properties to claim deductions for wear and tear over time, which was the figure the firm uncovered for each property.
“It is important to note that these depreciation deductions are not an indication of the house values but are based on the construction costs,” they said in a statement.
“In the case of this gated community, the construction costs will also include a proportion of renovations and upgrades of the shared facilities like the communal pool and tennis courts attributed to each house.”
These tax benefits would go a long way to explaining the outrageous price tags we’ve seen from veteran buyers like IT entrepreneur Danny Wallis and ‘The Lambo Guy’ Adrian Portelli in the past, with Portelli dropping a cool $5 mil on Steph and Gian’s winning home last year.
Wallis even told reporters last season that he was so shocked by the “extraordinary scenario” presented by the deductions that he had to check with his tax adviser that it was legal.
But after questioning how depreciation could apply when many of the goods and materials used on the show were provided at heavy discounts or without charge often in return for promotion on the show, he was been assured it was all above board.
“The deductions do make them quite a good purchase,” he said at the time.
And the winner is…
The clear winner on The Block this season (in terms of tax lurks) was Kristian and Mimi’s property, according to BMT’s calculations.
It found they had the highest total estimated deductions of between $4.878m to as much as $5.391m.
Kylie and Brad’s house was a close second, estimated between $4.834m and $5.342m, with BMT claiming they had “the largest average first-year claim of $176,000 compared to an average of $166,000 across all properties”.
Ricky and Haydn’s house had total estimated deductions of around $4.842m to $5.352m, while Courtney and Grant’s lucky buyer was looking at $4.26m to $4.708m in tax claims.
Maddy and Charlotte, who replaced Jesse and Paige after their dramatic exit this season, came in with the lowest estimated total tax deductions, BMT said, ranging from $4.24m to $4.685m – though still more than double estimated prices the homes could fetch.
“The new owners will also be able to depreciate their part of the communal areas,” Mr Beer said.
“Cash flow is always a key consideration for investors, and tax depreciation plays a significant role”.
“Understanding these values can help buyers make informed decisions that will maximise their returns.”
