I have some idea on tax and depreciation as well as capital expenses of IPs and have had depreciation schedules for my houses for many years.
I am looking at having a security screen door installed in one of my IPs, it does not currently have one, and for security reasons the tenant wants one in the house, is this considered a capital expense as it is an improvement, or as it is required for safety/security, is it depreciable?
Secondly if it was depreciable, (if I was replacing an old one for example), when it comes to the $300 immediate deduction vs claiming it over its life for more expensive items, is the $300 inclusive of the installation and call out fees, as most tradies charge 80-120 just to do the job.
Can I claim the screen door if it is under $300 and the install separately or do they have to be combined… thus making the cost to be over $300?
If the installation was free, however they also charged me a fee for repairs to the back external door, would this 1. be considered like items, and need to be claimed together 2. be able to be claimed as a seperate charge and thus still able to claim my screen door immediately.
I understand than an explicit answer cannot be given to my situation without an ATO ruling, however general advice on this situation to help me better understand it is all I am after.
I am looking at having a security screen door installed in one of my IPs, it does not currently have one, and for security reasons the tenant wants one in the house, is this considered a capital expense as it is an improvement, or as it is required for safety/security, is it depreciable?
Generally, this would be able to be depreciated, as an improvement. It wouldn't be a building depreciation item, at 2.5%. It would be a separate asset, like carpets / airconditioning etc, and depreciated over it's expected life.
Secondly if it was depreciable, (if I was replacing an old one for example), when it comes to the $300 immediate deduction vs claiming it over its life for more expensive items, is the $300 inclusive of the installation and call out fees, as most tradies charge 80-120 just to do the job.
Yes it is. Depreciation talks about the asset 'being ready for use'. Installation and freight costs are included in the asset cost for getting it ready for use.
If the installation was free, however they also charged me a fee for repairs to the back external door, would this 1. be considered like items, and need to be claimed together 2. be able to be claimed as a seperate charge and thus still able to claim my screen door immediately
If the new door installation is free, then you'd be ok. The repairs to a different door would be considered a separate transaction.
I don't think an ATO ruling is required but I would refer these questions to your accountant. The amount that would be depreciated would be the total cost – door plus installation. A good property accountant who owns IP themselves apy for themselves when questions like this arise.
Ok,
I have been doing some digging and have found this on the ATO website:
http://www.ato.gov.au/individuals/content.aspx?menuid=0&doc=/content/00270218.htm&page=10
I just want to confirm that I am interpreting it correctly… the part under the heading "Cost is $300 or less".
The IP is owned 50/50 by my wife and I, does this mean that if the item costs less than $600 (ie less than $300 each) we can both claim it as an immediate deduction, meaning a $400 door with installation would be immediately claimable by both of us, as it is only $200 each?
Yes, this is correct. Not many people know about this.
DAMProperty | DAM Accounting Services
https://www.damaccountingservices.com.auThank you for your response, this is great news… I can now tell my PM to go ahead with the door knowing I can claim it all back in a month :p
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