Tax experts have revealed the staggering tax benefits buyers can get by purchasing one of The Block homes, with millions of dollars in deductions potentially exceeding the cost of purchase from day one.
The five homes were built from scratch and all have identical floor plans, but the report shows that not some homes offer hundreds of thousands of dollars more in tax write-offs than their neighbors.
House 4 underdogs Sonny and Alicia have won just one room reveal, but top the leaderboard in tax write-offs. Image: Channel 9/9Now
According to BMT Tax Depreciation, each home could generate between $5.4 million and $6 million in claimable depreciation deductions over its lifetime.
Each of the five properties in Daylesford has a guide price of $3 million to $3.3 million – four times the town’s median house price.
| Rank | House | Depreciation |
| 1 | House 4: Sonny and Alicia | $5,934,256 |
| 2 | House 5: Robby and Mat | $5,670,416 |
| 3 | House 3: Britt and Taz | $5,641,533 |
| 4 | House 1: Emma and Ben | $5,474,110 |
| 5 | House 2: Han and Can | $5,465,637 |
According to The Australian Taxation Office, property investors can claim depreciation deductions for the natural wear and tear of buildings and their assets.
Although all investment property owners can claim deductions, newly built and fully furnished homes such as The Block homes are given the opportunity to maximize returns by allowing buyers to claim both capital works (Division 43) and property, plant and equipment (Division 40).
“Every dollar of tax depreciation claimed reduces taxable income, meaning more money remains in the buyer’s hands,” said BMT CEO Bradley Beer.
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The five brand new homes are part of the new Middleton Field residential area. Image: realestate.com.au
“For The Block properties, the deductions don’t just offset costs, they can completely offset them. That’s an extraordinary benefit to investors.
“Across all five properties, the average first year claim is more than $236,000, giving buyers a significant cash flow benefit from day one.”
Topping the list for depreciation deductions was Sonny and Alicia’s House 4 with a whopping $5,934,256 in total deductions, for a first-year claim of $275,802.
In second place is Robby and Matt’s House 5 with a deduction of $5,670,416.
Coming in a close third is House 3, renovated by Britt and Taz with a total of $5,641,533 in deductions.
Britt and Taz’s House 3 has $5,641,533 in tax write-offs, according to BMT. Image: Channel 9/9Now
Emma and Ben’s House 1 ranked fourth with $5,474,110, and House 2 Han and Can placed fifth with $5,465,637 in deductions.
“For buyers, understanding the true financial value of these deductions is game-changing,” Beer said.
“It turns prestigious properties into powerful, high-yield investments.”
Buyer’s agent and The Block regular Frank Valentic said the depreciation schedules on The Block homes are the largest he has ever seen.
“If you buy apartments you might get $20,000 to $30,000 a year, if you buy a new house you might get $50,000 to $70,000 for the bigger houses, but none like this – this is clearly off the charts,” he said.
“Obviously there are a lot of extras thrown into The Block properties. [A home builder] It certainly wouldn’t put $5 million into a house and then sell it for $3 million.
“There’s obviously a lot of add-ons, sponsorships and things like that to be able to do that.”
Buyer’s attorney Frank Valentic will bid at The Block auction for investors.
Mr Valentic said the huge depreciation schedules were a strong attraction for his customers.
“Most of my investors actually kept them [the Block homes]. They didn’t sell them like Danny Wallis sells them like a new car,” he said.
The Block houses will go under the hammer this Saturday, with the final being shown on TV on Sunday evening.
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