capital works deduction or cost base addition

[mitta]

Hi all,

If we update windows with newer and larger ones in our Newly acquired 50 year old IP, would the costs be a new Capital works deduction ie: we would be able to claim it over 40years ? or would it be added to the cost base.

Also we spent $1k on the timber floors having them polished, would this improvement expense be a capital works deduction also, or would it be lost and added to the Cost base of the house as well ? Mark

 

[depreciator]

Bunging in new, larger windows is an improvement. So you would depreciate the cost at 2.5%.
Polishing timber floors is an interesting one. If you did it after acquisition and before renting the place out, you'll have to depreciate it - sadly at 2.5%.
But if somebody has owned an IP for a while and rips up the carpet and polishes the floors, it can be claimed as a repair. There is an ATO Interpretative Decision on this.
Timing can be important. I spoke at a seminar the other night and asked people who they should speak to before renovating an investment property. A few people said a builder. I said: 'No, talk to your accountant. Or a QS.'
Scott

 

[Pat]

Hi Mark,

The windows can be written off over 40 years, likewise the sanding. if you had tenants in the property already, those costs could potentially be written off immediately depending on whether those costs were merely bringing the property back to it's original look or whether they are an improvement on what was there previously.

 

[Pat]

Bunging in new, larger windows is an improvement. So you would depreciate the cost at 2.5%.
Polishing timber floors is an interesting one. If you did it after acquisition and before renting the place out, you'll have to depreciate it - sadly at 2.5%.
But if somebody has owned an IP for a while and rips up the carpet and polishes the floors, it can be claimed as a repair. There is an ATO Interpretative Decision on this.
Timing can be important. I spoke at a seminar the other night and asked people who they should speak to before renovating an investment property. A few people said a builder. I said: 'No, talk to your accountant. Or a QS.'
Scott

Hi Scott

The same advice for Mark as we have given him, you've gotta love that with professional advice and not common either

 

[mitta]

The windows can be written off over 40 years, likewise the sanding. if you had tenants in the property already,

Thanks Pat/Scott

Interesting one this, because whilst we were having the floors prepared, it was actually delaying the first tenants from moving in for a couple of days. I wonder how we stand there ?

those costs could potentially be written off immediately depending on whether those costs were merely bringing the property back to it's original look or whether they are an improvement on what was there previously.

The floors in this case would definately have been improved, we torn up the old carpet and had a contractor do his magic on them, therefore no repair but maybe we can get 2.5% ? Mark

 

[Pat]

Hi Mark,

If you are preparing the property for its first tenancy then it won't be deductible immediately so its a little smile every year for 40 years.