23 Jan 2017

3 Factors Affecting the Rule of Two : Part 2

2. Cash Returns

Another thing referred to here is just a pure cash return. When you start looking at things such as depreciation and you start bringing tax into account, that ratio of basically 1:2 is going to drop. Instead of needing two times, you might only need 1.6 times or 1.7 times because of the depreciation, which is the tax deduction you are getting for not spending any money. It is the tax deductions you are getting for the decrease in values, supposedly, of the fixtures and the fittings and the building structure itself, depending on when it was built etc.

We always recommend that you seek professional advice as this blog is for general information only