Another depreciation issue

From: Bill Lambert


Forgive me if this has been answered before but I've been through the archive and haven't found what I was looking for.
We have just finalised purchase of our first IP, a 60year old that has had several renovations. New kitchen in 94, repainted in the last year, new carport etc. The QS I'm getting claims that if the property was an investment property before we purchased then the renovations were probably written off as repairs and therefore not claimable.
Is he right?
What if we can't find out? especially if some of the work was two owners ago!
 
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Reply: 1
From: Dale Gatherum-Goss


Hi Bill

To the letter of the law, depreciation may only be claimed once on any item. Once that depreciation has been claimed, then there is none left for anyone else.

However, you mentioned that the QS type person (was his name Erik, bye the way?)

I find it strange that the QS is assuming that someone would have claimed a renovation as repairs and in doing so, not allowing you to claim the cost of that renovation as a deduction.

I don't think you'll have much luck with this fellow, I am afraid and so you'll either have to drop the idea, or, find another who will be a little more "understanding" of your plight.

Good luck and do let us know how you get on.

Dale
 
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Reply: 1.1
From: Bill Lambert


Thanks dale, so according to the letter of the law, the 2.5% capital depreciation on the renovated kitchen in 94 can only be used if it was NOT written off as a repair. Because ignorance is no excuse then not knowing and claiming can lead to tax trouble.

Also QS is not an "Erik" well not his real name.He works for large firm sometimes referred to by people in this forum.
 
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Reply: 1.2
From: Geoff Whitfield


Dale,

In actual fact, if I'd been able to claim a kitchen renovation and a new carport as a repair I would have been quite happy.

I thought the rules were fairly strict that they could not be repairs (I guess, unless the off chance that the old kitchen was totally wrecked by a tenant)?
 
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Reply: 1.1.1
From: Dale Gatherum-Goss


Hi Bill

Erik the Aardvark goes quantity surveying is an old Monty Pyhton skit. Sorry, I just could not help myself!

If you rely on the QS then you cannot get into trouble and, let's face it, the tax office are not in a position to really know anyway what depreciation has or has not been claimed already.

Have fun

Dale
 
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Reply: 1.2.1
From: Dale Gatherum-Goss


Hi Geoff

I agree and think that most of us would b delighted to be able to claim a kitchen renovation as a repair.

The rules are pretty strict, but, one of the problems with our tax system is that under self assessment, you can get away with claiming something incorrectly - or at least until you are audited!

Have fun

Dale
 
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Reply: 1.2.1.1
From: Geoff Whitfield


Dale,

Are you saying that Bill might be disallowed his 2.5% annual building depreciation for kitchen and carport because someone might have illegally claimed a deduction for those repairs in the past?

If that's the case, then I might be in trouble for a few QS's I have had done recently.

Geoff
 
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Reply: 1.2.1.1.1
From: Dale Gatherum-Goss


Hi Geoff


>Are you saying that Bill might
>be disallowed his 2.5% annual
>building depreciation for
>kitchen and carport because
>someone might have illegally
>claimed a deduction for those
>repairs in the past?


No, not at all. Almost the reverse actually . . . it seemed that Bill was not going to be allowed to claim depreciation because someone else had (perhaps) claimed the renovation as a repair.

What I meant to say was that if Bill could find a QS to give him a report saying that the estimated cost was $xxx then he could still claim the depreciation based on that report.

I also suggested that the tax office would not necessarily know whether the depreciation has been claimed in the past on that renovation in that property.


>If that's the case, then I
>might be in trouble for a few
>QS's I have had done recently.
>
>Geoff


Nah, you will be perfectly safe.

Dale
 
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