Good Afternoon
I have a simple question I'm looking for clarification on. I've had my investment property quantity surveyed and the 1st year depreciation is approximately $5500.
My question is, do I receive the entire sum of $5500 back at tax time, or do I only receive a tax deductible portion?
Cheers
Jon
Hiya
It comes off your taxable income.
ie. if you earn $100k a year and claimed $5k depreciation on a property – your taxable income would be $95k.
Of course that's a very basic example though – there's a heap of other claimable items when it comes to IP ownership.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Thanks Jamie!
So you don't get the full $5k as a deduction, only the benefits of dropping your taxable income by that amount.
On the topic of claiming depreciation…
If you renovate an investment property, can you only claim the set depreciation rate per year for the renovations? Also, I assume you are unable to claim depreciation once the property is sold?
Hi Paul,
that's right, you can only claim for the period of ownership in the year that the work was done – having said that, items under $300 can be claimed at 100% and items under $1,000 can be claimed at 18.75% in the first year (37.5%) in subsequent years. So the first year of claim has some accelerated items making it normally quite a good deduction.
In answer to the 2nd question depreciation can only be claimed for your period of ownership.
Hi Michael
It's good to see a QS on board – they don't appear to often. Would be good if you stuck around.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Thanks Jamie,
Happy to provide whatever assistance I can
Michael
Michael,
There is an interesting QS/Tax question here which you may be able to answer if you have time:
http://somersoft.com/forums/showthread.php?t=85211&page=2
quote
lets say you had a rental property that was damaged and needed partial or full replacement. Insurance pays out and reinstates/repairs. Does your now higher depreciation on the new property come to you as the owner, or does it remain at the old property rate?
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
The $5000 is a deduction from your taxable income, so $5000 deduction and $5000 reduction in taxable income means the same thing.
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