Can depreciation start from Date of Sale (Contract)?

[raoul]

Hi,

I have a tax question regarding the start date for depreciation of building and fitout.

I am sure that my accountant told me a few months ago that it is possible to start claiming depreciation from the date of sale and not from the later settlement date.

However, when I spoke to him recently, he says that he didn't say that and that it starts with settlement. So, I started doubted my memory.

Then, I raised this question with the real estate agent we just bought an IP through a few weeks ago and he called me tonight to say that he spotted a section in the Real Estate Agents training guide that said that depreciation starts from date of sale and backed it up with quotes from tax accountants and ATO rulings, etc. (I'm waiting for him to provide details...)

Anyway, is it legit to start claiming depreciation from the date of sale as opposed to the date of settlement?

I'm not sure what to think. I know that I'm liable for the property once I sign a contract of sale and my solicitor has recommended I get insurance straight away (or at least a cover note until settlement).

On the otherhand, I can't earn any rental income with this property until after settlement.

So, I guess that's one point for and one against.

Any wiser people willing to set me straight on this?

thanks and regards

raoul

PS I've searched back through past posts and couldn't find anything about this.

 

[DaleGG]

Hi

It is the date of settlement for depreciation purposes and the date of the signing the contract for CGT purposes and so there is naturally some confusion.

Sorry, it is probably not the answer you were looking for.

Have fun

Dale

 

[raoul]

Thanks Dale,

I was looking for the correct answer to put the uncertainty out of my mind (although it would have been good had it been the other way around )

Your answer also matches depreciation schedules I've had done in the past.