This is my very first post, and have been reading the forum boards for a few weeks and am really impressed by all those that contribute, thanks. I have a two questions for the wise.
First, my husband and I co-own two block of lands with a partner with all three names on the title deeds. We are wanting to remove each others names off the titles, ie; then he owns one and we own the other. Can advice be given in
1. How to get this done (on the cheap) in regard to how much stamp duty we have to pay – blocks are in Queensland. I have been told that we have to get three valuations and the govt takes the highest.
2. I have read up on CGT and know that you have to own the block for a year so that we will only have to pay 50% CGT, if we change the titles around, does the year start again?
My other question is in regard to depreciation. We also own two IPs (without this partner – ie. only in my husband’s name). These have both been purchased in the last fin year 2003-2004 and am about to get organised for our accountant. He has said a depreciation schedule doesn’t need to be done for chattels etc as both houses are too old, one is approx 13 yos and the other 35-40 yos. I know that both properties do not have anything “new” in them and the 13 yo one has all original carpet, curtains etc which are all about crapped out. Does this mean that we shouldn’t depreciate this stuff and only do the building depc? Your words of wisdom from everybody would be appreciated.
Thanks.
Irish Kiwi
jkemsley
The 12 months doesn’t start again for your portion of the block but the potion of the block that you bought off your partner is first owned by you at the date of transfer so if you sell within 12 months there will be no CGT discount on that portion.
Residential buildings constructed after 17 July 1985 can be depreciated at 2.5% per year (4% if constructed between 18 July 1985 and 16 September 1987) when they are income producing (Div.10D: Sec. 124ZF-124ZLA now Section 43 & TD93/62). If the building was purchased after May 13 1997 this amount reduces your cost base for capital gains tax purposes, regardless of whether you actually claimed it or not, so in effect you are getting a tax deduction now in return for a higher tax bill when you sell.
A good reference regarding the building costs is ATO ruling TR 97/25 available from the ATO web site. There are a couple of little catches to relying on a quantity surveyor’s report. The first one being that you can only rely on a quantity surveyors report if you have exhausted all other means of finding out the original building costs. The legislation even compels the seller of a property to provide you with this information – Subsection 262A(4AJA) of the 1936 Act. The second catch is if the original owner was a spec or owner building the calculation cannot include their labour or profit.
So there is still some depreciation to run on the 13 year old building but you will probably need to get a Quantity Surveryors report. As for the carpets and curtains etc you can estimate their value at the time you purchased the property and work your depreciation from there.Julia, wouldn’t you get the QS to do the ‘contents’ as well if you’re already paying them to prepare the report?
Also, with reference to the May 1997 date – how does the ATO determine the depreciation you ‘should’ have claimed? Do they get a QS done on the property you sell, or do they have some arbitrary figure they use?
Cheers
MelMel,
Yes QS reports normally cover the plant and equipment but as you can estimate the cost of these it is not normally worth the cost of a QS report for pre 17th July 1985 properties as no building deprn claim availble. In this part of my answer I am refering to the older property, though I admit now when I look back I didn’t make this clear.
The ATO actually employs its own valuers. In fact one of my clients has just been recruited so I look forward to finding more out about this process next time I do his tax return.Originally posted by Julia:
The ATO actually employs its own valuers. In fact one of my clients has just been recruited so I look forward to finding more out about this process next time I do his tax return.[specool] It will be nice to know how the ATO ‘thinks’ occasionally…
Cheers
Mel
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