Depreciation

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divcor
Member
@divcor
Join Date: 2004
Post Count: 2
November 10, 2004 - 11:14 am
I have found a few positively geared properties and am now considering their respective depreciable tax deductions to get the full picture before purchasing.
The properties are being sold with existing tenants and hence I’m sure their current owner is depreciating some assets of the property. Naturally I wish to keep claiming depreciation on these assets once the title has transferred but am unable to find out which assets, if any are being depreciated.
Can I depreciate any assets if no details of their depreciation are passed on to me? Alternately, must I simply keep these asset’s costs (which of course are unknown) in the purchase price of the house and use this as the overall cost base when I come to sell the property?
Your advice is appreciated.
Andrew
Derek
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@derek
Join Date: 2004
Post Count: 3,544
November 10, 2004 - 12:17 pm
Hi Divcor,
A Quantity Surveyor can establish the ‘start up’ value of the building and also of the plant and equipment contained therein.
The age and nature of the building will determine how much depreciation is left to claim. Recommend you PM/phone ‘depreciator’ (AKA Scott) for expert comment. His firm will prepare a depreciation report for you.
Also recommend a search of the forum using ‘depreciation’ as the topic has come up before.
Derek
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Mortgage Hunter
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@mortgage-hunter
Join Date: 2003
Post Count: 3,781
November 10, 2004 - 12:23 pm
I think you will find that depreciation starts overagain when the property is sold. Not at original value but rather at curent market value.
A Quantity Surveyor will help here.
Cheers,
Simon Macks
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http://www.mortgagehunter.com.au
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depreciator
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@depreciator
Join Date: 2003
Post Count: 541
November 11, 2004 - 12:42 am
Hi Andrew,
In the sale of commercial property, there are often written-down values of assets noted in the contract of sale. I don’t think I’ve ever seen a residential contract with written-down values of assets.
Essentially, what we do is put a value on the assets – stove, carpet etc – as of the first available to let date. The best way to explain it is that it’s a second hand replacement value i.e. if you had to replace that oven with an oven of a similar make and condition, what would it cost. This is an ATO prefferred method of valuing ‘plant’.
If you’re looking for +cf property, you’re probably looking away from major centres and you’re probably looking at properties where the building write-off won’t come into it i.e. properties built before 85. So the cost of getting a QS there may be disproportionate to the return in depreciation. You are allowed to ‘self assess’ the value of Depreciable Assets/Plant. If you give me a call I can talk you through this. Then you’ll be able to claim any available depreciation and it won’t cost you a cent.
I’d be wary about depending upon depreciation to make a purchase stack up. I look at depreciation as a bit of ‘cream’. Also, with older properties, much of the depreciation is claimed in the first couple of years.
Hope that all makes sense.
Tax Depreciation Schedules
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