Hi, I have just purchased my first IP and need advice about getting a depreciation schedule done. The house was built in 1989, is it worth getting a depreciation schedule done? Can anyone recommend a firm to use in Adelaide?
Thanks, Dave.HI Dave,
As the property was built (commenced) after 16th Sept 1987 you will be able to claim 2.5% of the CONSTRUCTION COSTS/annum for 40 years from this date. So based on the information provided you have approximately 23 years of capital costs to be claimed.
In addition the property may also have undergone significant renovations and upgrades. These too, will enable you to use the same basis for capital depreciation claims.
Furthermore the property would include a number of items that are considered plant and equipment. Each of these has it’s own depreciable opening value and life and would be claimable.
Scott (AKA Depreciator) is/was a regular poster here and he will be able to provide you with some more accurate information. Suggest you do a search and his post will reveal his contact details.
Derek
[email protected]
http://www.pis.theinvestorsclub.com.au
0409 882 958
Skype – derekjones2113Hi Dave,
For any residential investment property where construction commenced after July 85, it’s worth getting a Depreciation Schedule.
And as Derek said, in addition to depreciating the building you’ll be able to depreciate the Assets (Fixtures and Fittings).
We do a fair bit of work in Adelaide.
Feel free to give me a call or send me an e-mail if you have any questions.
ScottTax Depreciation Schedules
Australia wide service
1300 660033
[email protected]
http://www.depreciator.com.auHi Dave,
I’m not a ‘professional’ on the topic, but I have learnt this from personal experience. I am upto house number 5.
Claiming depreciation on the building to get back some money on your tax return is fine if you need the money to make the deal positive geared. But you do realise that claiming the depreciation now is more of a tax deferral, than tax saver. You don’t aviod paying the tax, you just end up paying more in capital gains tax (CGT) when you sell.
Brief explanation:
An example:
If you buy a property for $100K and then sell for $110K you pay CGT on the $10K gain right.
But – if you claimed $10K in depreciation during the time you owned it, it the eyes of the ATO it is as if you brought it for $90K when you sell (as you have saved tax on that $10K already). So then you have to pay CGT on $20K. Of course there are other factors (if you own the property over a year you get a 50% discount on the CGT etc).So you need to decide when you want to get the tax average. Every year at tax time or when you sell.
Personally I have found it better to wait to I sell and save on CGT.
Lisa
Hi Lisa,
The ATO can make adjustments, in their favour, for property built or was purchased after after May 13, 1997 or 30 June, 1999 as detailed below.
This little gem escapes some accountants – just don’t ask how the ATO will calculate the depreciation that you should have claimed but didn’t.
From ATO CGT Guide.
You must exclude from the cost base of a CGT asset including a building, structure or other capital improvement to land that is treated as a separate asset for CGT purposes) the amount of capital works deductions you claimed or were entitled to claim in respect of the asset if: you acquired the asset after 7.30pm (by legal time in the ACT) on 13 May 1997, or you acquired the asset before that time and the expenditure that gave rise to the capital works deductions was incurred after 30 June 1999.
Additionally plant and equipment claims do not come into CGT calculations any CGT offset is based on capital depreciation only.
Derek
[email protected]
http://www.pis.theinvestorsclub.com.au
0409 882 958
Skype – derekjones2113[blink]
IMHO
You’re much better off getting your depreciation schedule done and getting your money now..I’ll leave the finer points to depreciator as to why you should be doing it now..as opposed to not doing it
Redwing
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