Depreciation on PPOR

[sandyfeet]

Hi all,

I am aware that I would have a 6 year timeframe where my PPOR will CGT exempt since it has become an IP. My question is how would the depreciation that I have claimed over the past 4 years impact this scenario:

PPOR purchase = 230k
Value = 380k
depreciation claimed = 20k

The property was built in 2006, I lived in it initially, have had it rented from 2010to present.

Thanks,

 

[D.T.]

Only claim depreciation in the years it was rented.
Fraction it for any part years rented.

Talk to accountant about whether this affects cost base for CGT purposes.

 

[GaryT]

If it is always your PPOR and remains so when you sell it, depreciation will have no affect.

It is generally assumed that the selling price of the depreciable items are their written down value so there is no "income" relating to these items for tax purposes.

 

[Paul@PFI]

Your question may not have actually been addressed.

If you claimed $20k of deductions which comprise both depreciable items and eligible construction these deductions may erode your cost base. The $230K purchase price + duty + legals ect is typically the cost base however it can be affected by the value of some deductions claimed as these erode the cost base. Your cost base for determining capital gains may no longer be $230k. It "may" be $210K...Hence a higher future total capital gain (eligible for 50% discount)

I say "may" as circumstances vary.

There is also a relevant CGT point when the property ceased to be PPOR and commenced as IP. The valuation at that time may be relevant if you hold the IP past the 6 year point.

 

[sandyfeet]

Thank you for the replies.

I intend to sell this property by the end of the year. If the sale occurs this year it will be within the 6 yr period from when it became an IP. Does this mean that it will be 100% exempt from CGT even though I have claimed some depreciation on the construction to the value of approx. $20k?

Thanks again

 

[Ed Barton]

Thank you for the replies.

I intend to sell this property by the end of the year. If the sale occurs this year it will be within the 6 yr period from when it became an IP. Does this mean that it will be 100% exempt from CGT even though I have claimed some depreciation on the construction to the value of approx. $20k?

Thanks again

Where have you been living since it became an IP? Renting? Or another property you own?

 

[GaryT]

Thank you for the replies.

I intend to sell this property by the end of the year. If the sale occurs this year it will be within the 6 yr period from when it became an IP. Does this mean that it will be 100% exempt from CGT even though I have claimed some depreciation on the construction to the value of approx. $20k?

Thanks again

Yes - as long you do not nominate another property as your PPOR for this period.

 

[sandyfeet]

thanks again,

no I have not lived in another property I own since vacating this residence so I guess I'm in the clear