Just evaluating a 2 bedroom unit in Beenleigh. Its a 20 year old 2 bedroom unit that has got the normal fixtures, cooktops, curtains, carpets, hot water system, BIR, skirtings.
Just wondering a rough estimate will there be $4K available depreciations for 20 years old bedroom unit?
also, I am contemplating updating the bathroom for $5K, should i wait 2 or 3 months before I do the reno so that I can claim it as repairs rather than being treated at capital cost?
Any advice much appreciated.
Cheers
johnWant to join financial independence before 31 years old, currently 25
This isn’t ‘advice’, but it may answer your questions.
First up, you’re ineligible for depreciation on the building (unless it has been renovated after Feb 92).
So that leaves you with the Fixtures and Fittings.
They may total $4,000 in value and you would be able to claim most of that in the first 3-4 years by using the Low Value Pool.
Of course, the inclusions may be of higher quality and worth more than that, but in Beenleigh it’s unlikely.
Be careful claiming too much as repairs and maintenance after 2-3 months. Imagine yourself answering this question from the ATO: ‘So John, you bought this place and after renting it out for 2 months the bathroom was trashed so badly that you needed to put in a new bathroom? Let’s talk about what your tenant did. I presume your property manager has photographs..’
Now that would be a worst case scenario, but I don’t think it’s really worth tempting fate.
Painting a wall because it’s been damaged is a feasible repair. Having to replace badly stained carpet would be too. But a whole bathroom?
Be careful.
Scott
Tax Depreciation Schedules
Australia wide service
1300 660033
[email protected]
http://www.depreciator.com.auScott
thanks for your quick reply, according to the builders report, the tiles in the bathroom is falling off and it needs fixing, so in a way, it was justified? and also, if there is termites and the cost incurred to fix up the termites, is it tax deductible?
Cheers
johnWant to join financial independence before 31 years old, currently 25
Just as an aside to everyone, whenever I need to repair anything in one of my places I get my PM to send me before and after photos. Nobody has ever asked to see them, but I like to know I’ve got them just in case.
Tax Depreciation Schedules
Australia wide service
1300 660033
[email protected]
http://www.depreciator.com.auIf the place has termites in it then I would seriously consider if it is really worth buying and compounded with the state of the bathroom you should think carefully about how much this place is really worth.
As has already been said you have to be careful about trying to write capital improvements off as repairs this will ring alarm bells in the ATO.
I would consider this place carefully and ask yourself seriously can you find a place that is better value.Cheers
John[smiling]Taipan makes a point that if the place has termites you might reconsider the purchase (unless you can use it to negotiate a great price).
You say that the bathroom has tiles falling off it now. So the damage has not been done while you have owned and been renting the place out. You therefore cannot really claim it as a ‘repair’ against your income. There is a logic to this. If you buy a place and need to spend money on it before renting it out, this really becomes a ‘cost of aquisition’. It is is not immediately claimable and really not depreciable either. It is added to your cost base when calculating CGT when you sell.
This is sort of straying into accountant territory, so you’d best run this past your accountant.
Regards,
Scott
Tax Depreciation Schedules
Australia wide service
1300 660033
[email protected]
http://www.depreciator.com.au
You must be logged in to reply to this topic. If you don't have an account, you can register here.
