building a IP - Depreciate or not? pros and cons

[MFG]

hi,

i am purchasing a land and will be building a house on the land ->IP.

land cost around 120k, building cost around 200k.

I am thinking of depreciating the building as well.

Can someone please highlight some pros and cons for depreciating the building?

Do you think it is worth doing? negative geared and borrowing 100% of fund.

cheers. Thank you for your advises.
Scott

 

[rugrat]

Maybe I have missed something, but why WOULDN'T you depreciate?

 

[MFG]

Hi,

i am new to all this....

if you depreciating the building, when u sell the property, will the ATO then sees a higher capital gain since the building has been depreciated? (selling price - land price (building price is not included since its depreciated)

i may be wrong here.. pls advise.

 

[Simon]

Hi,

i am new to all this....

if you depreciating the building, when u sell the property, will the ATO then sees a higher capital gain since the building has been depreciated? (selling price - land price (building price is not included since its depreciated)

i may be wrong here.. pls advise.

If you sell...

If you own for more than a year you get a 50% reduction in CGT.

So you claim 100% depreciation then have it added back at 50%.

I'd be claiming it. But then I don't sell so it is money for old rope.

 

[MFG]

thanks Simon

 

[Terryw]

I think that you may even be required to add back depreciation when calculating capital gains even if it was never claimed.

 

[depreciator]

They repealed that rule, Terry. It was always pretty dopey.

Remember, it's only depreciation claimed on the building that has a CGT imposte, too. The fixtures and fittings don't come into it.

Aloha (I'm in Hawaii at a conference)

Scott

 

[Terryw]

Thanks Scott. Thats good to know.