Claiming repairs paid from pre-purchase levies ?

[NIF]

Hi

I purchased an old apartment a few years ago which (like all units in the block) had structural damage to the balconies. Before I bought it the body corp had already raised about $20,000 from each apartment owner to repair the balconies , & the price negotiations allowed for this. The repair work on the block was completed recently & the monies raised paid out in full.

My question is whether I can claim depreciation on the repairs ? Even though I didn’t pay the levies myself the purchase price allowed for the previous owners having paid them.

Anyone know ?

Thanks

 

[depreciator]

This would be one for the accountants out there, but I'll throw in my two bobs worth:

'Repair' is the key word.

If the work was a 'repair' as opposed to an 'improvement', the previous owner would have claimed 100% of the cost. In this case I'd say you're out of luck.

The ATO may expect you to find out what the previous owner did. Failing that, the Body Corp should be able to tell you what their advice to owners was.

If the work was an 'improvement', then it's a different matter e.g. if the balconies were upgraded or enlarged.

This is just what I think. As I said, it's really accountant territory.

Scott

 

[NIF]

Yes they were upgraded & improved. So any claim would be for depreciation.

And as far as I understand, the previous owners wouldn’t have been able to claim the sinking fund levies they paid because the money hadn’t yet been spent.

 

[depreciator]

Given that the 'repair' has become an 'improvement', you may be okay.
Run it past your accountant, though. I'm not sure whether work paid for via a sinking fund needs to be treated differently from work paid for via a special levy.
Scott

 

[NIF]

Actually it was paid for by a special levy, not from a sinking fund.

Thanks for your help !