Depreciate or Appreciate?
Reply: 1.2.1.1
From: Joe D
I recently had a depreciation schedule done on a 6 year old IP by a QS who itemised all items with a value at time of construction (96) and a value at the time of settlement (Mar 02).
Whilst he was very familiar with construction pricing/costs etc he admitted he was not fully conversant with latest tax rulings, and as such, he would itemise each component and leave it to my tax adviser (accountant) to interpret as to how each item should be depreciated.
He did a great job in itemising a base cost for special building write-off as well as an itemised list for additional "grey" items which could be depreciated separately at higher rates or added into the special building write-off component.
As part of his brief, I provided him with drawings/plans (obtained from council) as well as a few receipts the previous owner had passed onto me.
What I was surprised to discover from my accountant (please confirm Dale) that all the non-receipted items could be depreciated as from the date of settlement (generally at a value the same or slightly higher than their original purchase value even though some were as old as the building itself, whereas, the items for which receipts were produced would need to be depreciated from the receipt date, which in a lot of cases gave them a nil or minimal value at todays date.
In hindsight, I would have been better off "losing" these receipts (or at least not giving them to the QS.)
Funnily enough, I can't understand the logic behind this ......
Joe D
" Juggling is like life...... its fun, but sometimes you drop the ball ! "