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
 
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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
 
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