A few Q's

[FunTimes]

I am new to the holiday rental property whole investing in property thing and would like to ask a few questions about taxation.

First, I am wondering about depreciation. I think I read somewhere that I can depreciate at 4% per year. I am looking at an 8 year old holiday unit. The unit is part of a complex and is fully managed.

If the property is depreciating, what value do I depreciate against, eg. if the property originally sold at lets say $200 000 after it was built and I now come along and buy it for $300 000, do I depreciate against the $200 000 or $300 000 figure?

If I say earn $45 000 from rent and then say $22 000 is deducted for the management and other fees by the management agency and if I pay $21 000 in intrest on the loan, do I have to pay tax on $24 000 and then get as many deductions from what the management agency as possible to try claw this back?

Finally (for now if I am allowed to use the unit for 4 weeks a year, does this in anyway count against me wrt the property being owner occupied?

Thanks

 

[Peter_Tersteeg]

Hi FT,

You'd get a quantity surveyor to inspect the property and write a depreication report for you which will describe the various components of the property and how much depreication is available in them.

Not all parts of a property depreicate at the same rate. The building can usually be depreciated over 40 years (I think), carpet over 7 years (I'm not sure), etc.

I really don't know how quickly things can be written off, which is why I pay a few hundered dollars for the report. It's well worth the money spent.

Beyond that you give the report to your accountant and they work out your tax return for you.