Just purchased a 10 year old house. No depreciation has been claimed to date as the property was PPOR for 1 owner.
I have had a QS value all assets at date of construction (10 yrs ago)
Do I have to write down these values for the 10 years gone or can I start depreciating from the original value?
eg Aircon $4000 Effective Life 20 years
Is my opening amount $4000 or $2000???
Hi Paul,
I’m a little bit confused about what you’ve got from the QS.
Surely the QS has given you a report that tells you what you can claim for the next 10-20 years or so? If you’re having to work out this, he’s only done part of the job. Hope it didn’t cost much.
He would have put a construction cost on the building itself at the time it was built. This depreciates at 2.5% per annum for 40 years from construction. So if it was built in 1995, it will depreciate until 2035. That’s the easy part.
Then there are the Fixtures and Fittings. These need to be given a value on the first available to let date i.e. when you put the property on the rental market. So that 10 year old air conditioner needs to be given a ‘written-down value’. Using the effective life is one way of doing this, but it may not be the best way from your perspective. Different air con units have different effective lives, too. Split systems up to 20KW have an effective life of 10 years. A room unit has a 10 year life, too. Ducted systems are more complicated because the ducting is part of the building.
I’m happy to look at what you’ve got and give you some pointed questions for the QS so you get something you can use.
ScottTax Depreciation Schedules
Australia wide service
1300 660033
[email protected]
http://www.depreciator.com.auHi Scott
I have a Certificate of Assets which lists all fixtures and fittings, their value, their effective life and diminishing value rate.
eg
Value Effective Life DVR
1. Carpets $1000 10 15
2. Timber Flooring $3000 15 10
3. Venetian Blinds $4000 10 15etc etc…
A spreadsheet listing the claimable amounts for a 10 year period was an extra $100 and I figured my accountant would do that anyway so didn’t ask for one. For that matter it would only take me 1/2 an hour to do up a spreadsheet myself.
I just wasn’t sure whether I had to write down the values listed. Unfortunetly 3/4 of his list has a 10year or less effective life so based on what you’ve said those items are nolonger worth anything.
Not sure why the QS bothered to list items such as an ornimental pond pump with a value of $99 and an effective life of 5 years.
Paul
Hi Paul,
Read carefully what I said:
So that 10 year old air conditioner needs to be given a ‘written-down value’. Using the effective life is one way of doing this, but it may not be the best way from your perspective.So, what would be the best way from your perspective? Let’s say you buy today a 20 year old home unit. In the kitchen, is a wall oven. Now that wall oven has been there for 20 years and ovens have a 12 year effective life. Does that mean the oven has no value? Not at all. You paid for that oven. If there was just a hole in the wall theoretically the price of the unit would have been reduced.
So a QS needs to look at that 20 year old oven and determine a value for it. Essentially, the QS needs to work out what it would cost to replace that oven with an oven of the same model in the same condition, a ‘second hand replacement value’, if you like. It may only be a few hundred dollars, but you might as well grab it.
Your carpet I gather was $1,000 laid new 10 years ago? As you said, carpet has a 10 year effective life. Does that mean your carpet has no value now? Of course not. You paid for it in the purchase price of the property. If the carpet was a reasonable quality originally and if it has been looked after it will have a value. Again, the QS needs to ascribe a ‘second hand replacement value’ to that carpet.
Any item with a starting price of under $300 on the first available to let date is claimed in full in the first year e.g. your pump.
Any assets with a value of between $300 and $1,000 go into the Low Value Pool. The Pool depreciates at 18.75% in the first year and 37.5% per year after that.
I’m afraid your QS really hasn’t been terribly helpful. At least you got a construction price for the house out of him! Under the self assessment rules, you can put your own values on the air con, carpet ets.
If any of the above doesn’t make sense, please call.
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.
