G’day all and I’m new to this forum and haven’t purchased an IP yet.
Query for you on building depreciation as I am unsure:
1. I understand when you buy an IP you obtain a surveyors report which inlcudes the building contruction cost for either 25 years or 40 years. If someone owned the property before you and claimed depn for say 10 years, are you only left with 30 years depn or can you claim for the next 40 years?
Thanks
ET
My understanding is that it is 40 years from the date of first settlement / date of construction. Therefore, effectively it would be 30 years.
James
4% depreciation for residential buildings constructed after july 1985..
2.5% for residential buildings commenced after 15 september 1987..
you can claim for 25 years if property constructed in the interem of these 2 dates..
benefits of the depreciation allowance were diminished in the federal budget in 1997.. after that the total depreciation must be added back to the capital profit when the asset is sold..
does that help ?
short response, you cannot claim 25yrs, sell to me, i claim 25 yrs etc etc..
REDWING
“Money is a currency, like electricity and it requires momentum to make it Effective”
If you purchased a property built in 1994 today you would have 30 year’s worth of construction costs x 2.5% to claim.
Thanks for your help
ET [
]Sorry folks- this has left mea little confused… is it 40 years deductions (from original date- 1985/1987) or is it 25 years?
kay henry
Kay
For buildings built after 18th july 1985 4% and only applies for 25yrs from the date of completion.. so by 2004 there are only 6-9yrs left to claim the allowance, which expires in 2010-2013
I’d presume here that renovations etc would be additional to this date ( at the 2.5% or if small, written off over 3 yrs or so )
For buildings built after Sept 16th 1987 2.5% depreciation, and no time limit
The determining date is the date the ‘slab’ was poured..
Hope that helped ??
REDWING
“Money is a currency, like electricity and it requires momentum to make it Effective”
Thankyou Mister Redwing- certainly helps [
]It really makes it worthwhile to buy a unit/house built post-1987, and to pay the extra money for it. Beats getting depreciation just for curtains/carpets. [V]
kay henry
Originally posted by kay henry:Sorry folks- this has left mea little confused… is it 40 years deductions (from original date- 1985/1987) or is it 25 years?
kay henry
Hi Kay,
There are different depreciation rates for properties depending upon their classification.
Eg Residential property is as described above however travller accommodation is different which is again different to a building classified as being for manufacturing purposes.
Really is an area for experts.
Derek
Originally posted by redwing:
For buildings built after Sept 16th 1987 2.5% depreciation, and no time limitThis is the first time I’ve read anything about no time limit. Maybe I’m misinterpreting. What do you mean by this line, Redwing?
Doesn’t the 2.5 % figure equate to 40 years worth of depreciation?
I believe the structure is completely written off at 2.5% after 40 years.
Cheers,
Simon Macks
Mortgage Broker
http://www.mortgagehunter.com.au
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Hi Simon,
Absolutely correct – 40yrs X 2.5% = 100% – hence the structure is completely written off.
Traveller accommodation and manufacturing property is written off at 25 yrs X 4% = 100%.
There are variations in trigger dates depending upon its classification.
Derek
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