Benefits of Tax Dep Schedule on 1950's house

[roypropertyinv]

Hi all

I'm in the process of completing a purchase of a house built in the 1950's, with fairly old fixtures and fittings and have a couple of questions about tax dep schedules.

1. What are the things that are most likely to be able to claim in a tax dep schedule in older houses? Is it generally cost effective getting these schedules for older houses?

2. I'm thinking about putting a new bathroom into the house as the existing is pretty tired. Am I likely to be able to claim anything for the demo of the existing? What do I need to do before ripping out the old to make sure I can claim? Am I right in thinking the new would then be deductible in the future?

3. The house will most likely be empty on settlement, if I'm to get a tax schedule done, is it best to get it done now while empty or wait until closer to end of tax year but have to go in when tenants are present (I'm thinking about cash flow and keeping the money in my offset account until nearer the time, their reducing my mortgage interest, albeit by a few dollars, but everything counts).

Thanks in advance.

 

[depreciator]

1. In older houses with no renos, the depreciation will be in the Assets: appliances, floor coverings, air con, curtains and blinds etc. the amount of depreciation depends on what is there.
2. If the bathroom is original, there will be nothing you can claim if you demolish it. (And to claim the disposal value of the Cap Works, you would need to have rented the place out for a while anyway.) You will be able to claim the new bathroom going forward.
3. It's a good idea to get a Schedule done before you do anything to the place to establish some basis for future deductions and it's always easier before tenants move in.

Scott

 

[Paul@PFI]

From a accountants perspective I refer all clients to a QS and advise them that the QS opinion should be obtained. If they confirm its not worth doing then that's OK. Its VERY common to find what you think is a 50's home had substantial reno's in the late 80's early 90's eg kitchens, bathrooms, extension, garage etc Also you may not notice it but fencing, hard landscape (retaining walls), pools, pergola etc.

And of course those "plant and equipment" items such as oven. If you have a 50's oven I would be surprised.

 

[libertyrx]

from my personal situation, I bought a 50's place and year 1 my now ex-accountant said not to worry about a depreciation schedule because of its age.
After investigating this forum about them I arranged one and as Paul said there had been some renovations that weren't obvious to me.
We ended up with an extra $3-4k per year tax deduction.

 

[Paul@PFI]

I will say it over and over again and again.

ONLY when and if a quantity surveyor tells you its not worth obtaining a schedule do you ever believe that a schedule is not worth obtaining

 

[BMT Tax Depreciation]

I will say it over and over again and again.

ONLY when and if a quantity surveyor tells you its not worth obtaining a schedule do you ever believe that a schedule is not worth obtaining

I would like to think that this is true in the vast majority of cases. About two weeks ago I had to explain depreciation on an older property to an accountant who, from the sound of his voice over the phone, had been in the game for a long, long time.

While we had done reports for his clients before, he was still under the impression that only new constructions could be depreciated. He had told his client (now our client too!) not to worry about it. When I told him that, from the photos I saw of one them, $4000-$5000 in deductions in one year would be a no-brainer, he changed his tune and said, "Well, I suppose you've got a guarantee."

Accountants are often knowledgeable about depreciation but sometimes not. The latter is only a problem when they decide that, in fact, they are.

 

[Deltaberry]

Always worth doing especially if there's been renovations. I've had houses in the 1800s with very big depreciation schedules.