Depreciation for old properties

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From: Anonymous



Hi,
I have just bought a 10 year old property. Is it possible to claim 2.5 % building depreciation? If the cost of the building is say $100,000 can I claim 2.5% of this, even though building is 10 years old?. If I can claim, does this have any effect on my capital gains tax when I sell the property ?.If anybody can help me it would be greatly appreciated. Thanks

 

[WebBoard]

Reply: 1
From: Steve Kiddle


Firstly, you will get better responses on this site if you give your name.
As I understand, Properties post 1985 can have the 2.5% deduction for 40 years from date of construction.
Then for every $1000 you claim as capital depreciation, this reduced the initial valuation of the property by $1000, hence increasing your capital gain. If you claimed a capital depreciation tax deduction but did not adjust the capital gain on selling you would effectively be claiming the tax deduction twice - once for depreciation and once to minimise your capital gain.

I think I have it right but more astute IP investors will comment further.

Steve K

 

[geoffw]

Reply: 2
From: Geoff Whitfield


Have a look here:
http://www.ato.gov.au/content.asp?doc=/content/Individuals/9033.htm&page=10

10 years old would make it after 15 September 1987, so you would get 2.5%.

That is on the cost of the building only, not the land- and it's historical cost.