cgt

[Teumaz]

On selling my investment property my accontant said all depreciation and building allowence claimed for over the years had to be included in the cost base and shoiwn as a reduced cost base thus increasing cgt. Does not seem right.

 

[twodogs]

On selling my investment property my accontant said all depreciation and building allowence claimed for over the years had to be included in the cost base and shoiwn as a reduced cost base thus increasing cgt. Does not seem right.

Building allowance is added to cost base, not depreciation. When property was purchased also matters and after sometime in 1999, building allowance is added even if never claimed as a deduction. Query your accountant or find another (as I'm not an accountant).

 

[Ausprop]

On selling my investment property my accontant said all depreciation and building allowence claimed for over the years had to be included in the cost base and shoiwn as a reduced cost base thus increasing cgt. Does not seem right.

my accountant said the same thing... I tried to argue it and they verified the position with the tax office. so much confusion on this topic

 

[Ian (WA)]

Me too!.....sold a unit a few years ago and all depreciation was "added back" to the cost base. To say I was spewing is an understatement, but accountant was quite explicit and would not budge.

I'm still yet to understand the benefit (if any) of depreciating for five years only to add it back when calculating CGT.

I will find an answer.........other than never sell again.

 

[buzzlightyear]

I'm still yet to understand the benefit (if any) of depreciating for five years only to add it back when calculating CGT.

I will find an answer.........other than never sell again.

Better to get the cash flow benefit in the early years (esp if negatively geared) and then pay it back so to speak in 5 years. Simply a time value of money consideration.

But you are right, if you can afford not to sell, even better

 

[Ian (WA)]

Me too!.....sold a unit a few years ago and all depreciation was "added back" to the cost base. To say I was spewing is an understatement, but accountant was quite explicit and would not budge.

I'm still yet to understand the benefit (if any) of depreciating for five years only to add it back when calculating CGT.

I will find an answer.........other than never sell again.

 

[Ian (WA)]

What the @#$% happened there???

I thought I only replied once.........that's the problem with multiple personality disorder!!!

 

[twodogs]

Discussed on InvestEd before, refer comment by NickM, a real accountant

http://www.invested.com.au/4/cgt-depreciation-fittings-fixtures-1108/

 

[AVD]

Hi

Capital works deduction is added back, not depreciation. It simply reduces the cost base but depreciation for taxation purposes does not reduce the cost base at all.

Regards,

Alysha

 

[sash]

This is why I invest in older properties (pre 1985) as they are not included in the cost base for Div 43 depreciation.....

 

[twodogs]

This is why I invest in older properties (pre 1985) as they are not included in the cost base for Div 43 depreciation.....

There are good and bad points to Div 43 deductions.

I like that I get an INCOME tax deduction now (at marginal rate of up to 48.5%), but if, and that's only if, the property is sold my CGT has is increased.

As CGT can get the 50% discount, that makes the marginal rate up to only 24%.

So, this system allows more cashflow and less tax now, with only part increase in tax later on, if at all. Seems just too nice of the Government really.