Hi all,
It’s tax time again and I have a few general questions on depreciation of items in an IP.
1) Lets say you had a dishwasher that the tenant wanted to buy from you. You had it for 5 years and have been depreciating it for 5 years. If you were to sell it, do you claim the remaining 5 years depreciation minus the sold price at tax time? Or do you calculate it differently?
2) The ATO has a effective life schedule on their web site. It has some small things like toilet brushes, soap holders etc. Obviously they cost less then $300. So are you supposed to depreciate something that’s about $10 over 5 years? It doesn’t make sense [saywhat] My understanding was that a depreciation schedule only applies to items over $300. Is this correct?
3) What is accelerated depreciation? Is it only used when something breaks and is beyond repair?
4) Can you buy 2nd hand things from the paper and claim them from tax? There is obviously no ABN docket on the items. I heard that this is no problem if the item is less then $300, is this correct?
Any comments would be greatly appreciated.
Orion
Hi Orion,
These questions are probably better answered by an accountant (I’m sure Julia will leap in soon), but I’ll have a stab at them.
1. If you’ve been depreciating that dishwasher for 5 years, it will have a written down value. I presume if you sell it for more than this, you have made a profit. If you sell it for less than this, you have made a capital loss.
2. Items worth under $300 are written off immediately. These items will appear on a Tax Depreciation Schedule.
3. Accelerated Rates of Depreciation apply to properties purchased between a date in 1992 that escapes me right now (I’m out of the office) and Septmber 1999. Using these rates is optional.
4. Definitely a question for an accountant. If you buy something from the paper, I imagine it’s an idea to get the seller to write you an invoice with their address etc.
Scott
Thanks all for yours reply and emails, but like suggested, I’ll talk to my accountant in a few weeks when I do my return.
Orion
You must be logged in to reply to this topic. If you don't have an account, you can register here.
