Does anybody know what the % depreciation is on new investment properties in Perth.
Also is stanp duty totally tax deductible in the first year of owernship?Dave
Use my software to work it out. Address in the footer.
Depreciation is a complex area and your question is too broad.
Here is some info from my helpfile
All items in a property will invariably have a limited useful life. Depreciation is usually caused by wear and tear. The rate at which items depreciate each year is an allowable tax deduction. Generally an investor is able to claim such depreciation as an income tax deduction providing the item is owned.
Depreciation is commonly calculated by one of two methods, ie. the Prime Cost or Diminishing Value methods.
The Prime Cost method allocates an equal amount of depreciation to each full accounting period over the effective life of the asset. On the other hand, the Diminishing Value method allocates a decreasing amount of depreciation in each full accounting period over the effective life of the asset. Accordingly, higher deductions are available in the early part of the asset’s life based on the rationale that an asset delivers better services in the earlier rather than later years of its life. Depreciation rates based on the Diminishing Value method are one and a half times the rate of the Prime Cost method.
As you can see, depreciation is dependent on the effective life of the asset. The effective life is considered to be the period of time the asset can be expected to be used for income producing purposes, assuming it is kept in good working condition.
The Commissioner of Taxation publishes recommended effective lives of assets which taxpayers may optionally adopt as a safe harbour estimate for an item of plant. The Commissioner’s latest determinations of effective life are contained in Taxation Ruling TR2000/18. EZ-Rent provides these suggested values but also allows you to add your own fittings to the list and change the effective life of them. In addition, EZ-Rent lets you specify the purchase date of the fittings and they are calculated and apportioned based on the purchase year
EZ-Rent. The free tax and cashflow simulator for Australian property investors.
http://www.ez-rent.comDC,
Stamp duty is not deductible. It can be claimed to reduce the cost base of the property when you sell, in order to establish the CGT liability.
More changes are being mooted to depreciation by the ATO. Have a look at the following forum topics –
https://www.propertyinvesting.com/forum/topic.asp?TOPIC_ID=8712
https://www.propertyinvesting.com/forum/topic.asp?TOPIC_ID=8686
Please note, there is not one % figure on depreciation. It varies on specific items in your property, which will affect the total claimable amount.
James
DC..
Quick reply is 2.5%, however it’s more complex as Ez-rent has pointed out, different items also depreciate differently due to cost..lower costing items depreciate quicker..
Ditto re Georgis’s reply regarding Stamp Duty, not Everything is Tax deductible..
REGARDS
REDWING
“Money is a currency, like electricity and it requires momentum to make it Effective”
Hi DC,
I have a 2001 ‘roough rule of thumb’ that may be os use. I do need a building type (high rise, house, etc) so that I can provide you with some useful figures.
Ultimately a QS report will give you the exact figures.
I would also add that depreciation should not be the purpose for buying a property. The purpose of buying a property is to make money (growth or income is irrelevant) any depreciation claims are the icing on the cake.
Derek
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