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From: Richard Hughes
I have some questions regarding the effect of claiming depreciation on an IP and the impact of those claims when you come to sell.
All the property seminars are keen to tell you about claiming depreciation, but a friend was telling me he ended up with a bigger tax bill when he sold because of this.
Using an example of an IP costing $100,000, say I claim $15,000 of deductions over 3 years, and I then sell the property for $125,000. Ignoring all other factors (eg CPI, buy/sell costs ...)
Is the cap gain $25,000 (ie 125-100)
Or is it closer to $40,000 (ie 125 -(100-15))
Richard
I have some questions regarding the effect of claiming depreciation on an IP and the impact of those claims when you come to sell.
All the property seminars are keen to tell you about claiming depreciation, but a friend was telling me he ended up with a bigger tax bill when he sold because of this.
Using an example of an IP costing $100,000, say I claim $15,000 of deductions over 3 years, and I then sell the property for $125,000. Ignoring all other factors (eg CPI, buy/sell costs ...)
Is the cap gain $25,000 (ie 125-100)
Or is it closer to $40,000 (ie 125 -(100-15))
Richard
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