Fittings Depreciation Valuation?

Hi Guys,

Thats correct there are 2 types of depreciation. On memory i think one is called Depreciation and the other one is called Diminishing Value.

Depreciation – is the same amount deduction for every year for the next so 40 years or so. (Depending on how many years are left in the Depreciating Item)

Diminishing Value – Is were the deduction of a depreciable item value, dimishies over its life. For example a dishwasher might only have a life cycle of 10 years. First year depreciation will be $100 dollar second year $90 and so on till the depreication reaches its diminish value and ends.

Though if an item, is to be either replace before hand, before its deprecation schedule has finished. It is best to complete write that item off and recieve full tax benefits.

Cheers,
sis

People 4get that by saving just $3 a day & investing it sensibly
over a working life, you’ll end up with around $1 million

what people are telling is correct. You are better off getting a depreciation schedule done. The last schedule i had done was for the next 20 odd years, so should the tax department audit me i can show them where i got the numbers from. there are two ways they can do it, i cant remember what both of them are called.
there is a book at dymics you can look for, called “Real Estate Taxation” it was brought out several months ago. and although the information may be slightly out of date, it gives you the exact ATO web page to go to, to find out if theres been any new rulings etc. it also explains the two types of depreciation. I found the book clear and concise, it also gave examples on how to calculate your tax.
sorry i couldnt be more help answering exactly.
shaun

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Is it worth doing for a small property (say 1 b/r unit)that you are only holding onto for a few years, given the cost of a QS (a few hundred dollars??).

[/quote]

It will make selling it to an investor easier if it has been done.

‘Eat rich food, barbeque a yuppie’

With my previous IP 20 to 30 years old I spend $350 to $450 (can’t remember now) for tax depreciation at $2500 per year. I think it is a good value for money.

Warm Regards

ChanDollars
[Keep going, you’re nearly reach the end of financial freedom]

JimboJames,
It is not worth paying a quantity survery unless the property (if residenital) was built after July 1985 as it is the building depreciation that makes it worthwhile. Also Quantity Surveyors are not trained in tax law. The following is an extract from recent article I wrote on the subject:

Before you spend money on a quantity surveyor make sure you have exhausted all other means. The ATO will not permit you to use the quantity surveyor’s report if you can ascertain the original cost by other means. Subsection 262A(4AJA) requires the seller of a property to provide you with the original information. TR97/25, which is available from the ATO web site, is a good reference. You should also find out if the original owner was a spec or owner builder as the building depreciation calculation cannot include their labour or profit. Make sure the quantity surveyor you use is aware of the changes in depreciation rates for plant and equipment since 1st January 2001. These are set out in detail in TR 2000/18C5, for example refrigerators are now to be depreciated over 20 years, carpets 10 years. The ruling covers most items including stuffed crocodiles that are considered to have the same life expectancy as a refrigerator.

Julia

I bought An ip 20 yr, old house & got a Depreciation Schedule from Depro cost $500, it save me $5,000 in first yr. Do you think worth to do it or not?

Julian[]

With a good accountant, they will organise a depreciation schedule anyway. As for QS’s, I am led to believe, in order to claim a depreciation, and to get the full benefits on your property, is to have a QS and not just a regular depreciation schedule.

From the comments here, it would appear that opinions differ. Well I have an accountant, and like a lot of people, they aren’t infalible.

I assume also the cost of have a QS do a schedule is also tax deductible (cost incurred).

You might liek to check out those QS who are members of an association…eg the Australian Institute of Quantity surveyors. This lists surveyors in each state, their contact details etc.

cheers

Elves

Just a fast reply,

i too used DEPPRO and was happy with the results as for which method to use… it’s up to your personal strategy…

As julia said re Post 1985 properties, i’d still get a QS in, as you may have a 40yr old property, but some reno’s done 15yrs ago, carpets, 5 yrs ago, air cond 3 yrs ago etc..

A lot in Margaret Lomas’s books re Depreciation, also check out deppro’s website..

REDWING