Capital Allowance Question

[Paul@PFI]

A question for the QS experts out there.

Client has a newly constructed pergola in the rental prop that is owner occupied 50% and 2 tenants (1BR each) 50%. Taxpayer claims 50% deductions etc.

During 2014 a pergola was constructed.

Q: If this is attached to the house I'm of the view that the 2.5% cap allowance applies from date of completion.

Q : If its is free standing and a element of the yard does the same apply ?? Its not portable if you consider that a factor. Its a fixed structure. And yes the tenants have unlimited rights to use the yard, pool etc.

I ask this as landscape, fencing etc isn't eligible for capital allowance even where its timber etc. What the defining issue with a pergola being part of the building or being a free standing item ?? Is it still a habitable structure and so therefore eligible ?

 

[depreciator]

2.5%, Paul.
Doesn't need to be attached to the house.

 

[Paul@PFI]

Thanks Scott. Much appreciated.

Further question about some structural improvts. Retaining wall and fencing around a pool supported by the wall both eligible ?

BTW : The QS report for the site sucks. Its one of those that shows Year One, Year Two etc....Tip for all QS firms. Please use year dates !!! Scott its definitely not one of yours as I know yours do show the dates.

 

[depreciator]

Further question about some structural improvts. Retaining wall and fencing around a pool supported by the wall both eligible ?

Yep, depending on when they were done of course.

I think the problem with Dep Schedules is that there is no set format. Some are great and very clear, and some are hopeless. BMT, WB etc are all easy to read. Ones done by smaller companies can be a challenge - at least they are usually cheaper (handy when the acct charges to fix them).

 

[BMT Tax Depreciation]

Yep, depending on when they were done of course.

Seconded. Paul, this pretty well applies to anything as long as it's fixed: retaining walls, fencing, paving, etc. If it's not soft landscaping (turf, plants, loose wood chips, gravel, etc.) then you can depreciate it. If you can't find the asset in the list of Division 40 items (or, say, our rate finder) then it's usually Division 43.

 

[Paul@PFI]

Thanks guys much appreciated.

Agree that those small QS firms seem to always be the problem reports. Also they often only go for 8 years and just stop. I don't understand that. The scrapping issue can be seriously affected by that. I recently had a report where scrapping was an issue. The report didn't give (full?) breakdown to the respective composition of eligible amounts and also didn't show the whole life of deductions. I couldn't calculate the residual value left. I had to call them. They eventually provided a life report....Why didn't they do that when the client paid for it ??

There is a tip for an investor...My personal view is use one of the bigger firms. BMT, Washington Brown, Depreciator all come to mind.

And see the value of your investment - They even support client and technical queries like mine