Hi all,
Just trying to get my head around depreciation for property.
It was told to me (by a non investor) that if you claim depreciation you need to pay it back on property sale. This seems counter intuitive to me.
What they were saying was I buy property at 100k, over 10 years I depreciate it by 10k, if I sell it for 200k I would calculate capital gain as 100k plus the 10k I depreciated, minus the stamp duty I originally paid for the property ( because I apparently can't claim it as an expense until sale) lets say 10k to make the figures easy. Once all these additions have been made I would then apply the 50% discount and get taxed on 50k in this case.
Assuming Stamp duty thing is correct, which I am unsure on, I would have thought the above would be 100k, apply 50 % discount, leaving 50k, claim 10k stamp duty, cgt amount would be 40k.
Depreciation is depreciation.
So in essence I want to know, does the claimed depreciation get added on to the cgt figure, is stamp duty only claimable on sale, if so, does the 50% discount apply before or after you've taken stamp duty in to account.
Cheers
Matthew
Just trying to get my head around depreciation for property.
It was told to me (by a non investor) that if you claim depreciation you need to pay it back on property sale. This seems counter intuitive to me.
What they were saying was I buy property at 100k, over 10 years I depreciate it by 10k, if I sell it for 200k I would calculate capital gain as 100k plus the 10k I depreciated, minus the stamp duty I originally paid for the property ( because I apparently can't claim it as an expense until sale) lets say 10k to make the figures easy. Once all these additions have been made I would then apply the 50% discount and get taxed on 50k in this case.
Assuming Stamp duty thing is correct, which I am unsure on, I would have thought the above would be 100k, apply 50 % discount, leaving 50k, claim 10k stamp duty, cgt amount would be 40k.
Depreciation is depreciation.
So in essence I want to know, does the claimed depreciation get added on to the cgt figure, is stamp duty only claimable on sale, if so, does the 50% discount apply before or after you've taken stamp duty in to account.
Cheers
Matthew