Depreciation Question 2

[Jester]

From: John P


I have just exchanges on a unit in Kogarah. It is about 20 years old but it has a brand new kitchen which I will depreciate.

My question is: Should I ask the vendor for a photocopy of the receipt in order to assist the Quantity Surveyor?

I rang and asked a Quantity Surveyor this question and this was their response?

"Why not?"

How funny is that?


John_P

 

[Lotana]

Reply: 1
From: Lotana Von Amor


It does not cost much to ask for the receipt. But I wouldn't show it to the QSer. If his valuation comes up with a higher value - use the value not the cost as a base for 2.5% depreciation over the remainder of 40 years since the kitchen was installed.

Regards,

Lotana

 

[WebBoard]

Reply: 2
From: Denis Backhouse


John,

It could be a funny question ... If you laugh at losing money!

My understanding is that if you have a piece of paper that clearly states what a depreciable item cost, your QS is obliged to use that value (I may be wrong here .. But that's my understanding)

If, on the other hand, he is able to depreciate it as a component of the house, he can, as a qualified QS, establish the "fully worked-up price" for the item according to rules that QS apply.

This value can be significantly MORE than the purchase price!

A QS I met through Geoff Doidge's seminars told me that a sink that the builder had paid, say, $250 for over the counter, could value up at over $350 once the QS had accounted for all the other sink-related components that make up a "fully worked-up value" .. like the time taken by the architect to select the sink .. the cost of delivery .. the cost of installation ..etc.

Over all the depreciable items in a typical property, this can add up to heaps.

If your QS is AT ALL flippant about this, I'd look for a property-savvy one. Chris Smit at Sunnybank Qld is bloody good, also Anil Bakrania from Napier & Blakely.

By the way, Geoff teaches all the questions you should ask your professionals before you entrust your future to them.

Have a look at his website ..

www.financialsuccesssystems.com

He's a forum Hall of Famer, and there's lots of value on his site.

Best wishes,

Denis.