Depreciation Question

[Michael_X]

Hi guys,

I need clarification on the following scenario:

- I purchased an IP in May which settled a week before June 30th 2014.
- No rental income was marked in June 30th, 2014 statement.
- In 14 July 2014 statement, rental income was outlined as being paid from 20 Jun 2014 - 10 Jul 2014.

In short, can I claim depreciation for 2013-14 financial year?

Thanks heaps!

 

[Jamie M]

I'm not an accountant but I'd assume it would be pro-rated for the portion of the FY it was an IP - which is bugger all.

What does your accountant say?

Cheers

Jamie

 

[Simon]

It is not so much about you getting rental income as whether the house was available to rent.

 

[depreciator]

I'd assume it would be pro-rated for the portion of the FY it was an IP - which is bugger all.

Not quite. Assets under $300 are written-off immediately and Assets between $300 and $1,000 can go into the Low Value Pool - 18.75% in the first year whether that year is 52 weeks or a couple of days.

 

[Paul@PFI]

If the property was intended to be immediately available for rent at settlement and then available for rent through to 30 June there is no reason why deductions cannot be claimed despite there being no income.

I just did a tax return with similar issues today. First tenant moved in late June. Property was immediately available for rent at time it was acquired early May. The QS report was also prepared on same basis as being available fro rent from May on.

 

[Michael_X]

Awesome advice - thanks all!

 

[travelbug]

You are talking ONE week's depreciation.

If the depreciation was $500 that's $10.

Really?? Sweat the big stuff.

 

[depreciator]

If it's a near new property and a decent one, depreciation even for that last week of the financial year could easily be over $2,000. But in starting the dep schedule in July i.e. the next fin year, nothing will be lost.

 

[Tyla]

the first year whether that year is 52 weeks or a couple of days.

Is that only for low value pool? Do you have to pro rata for above 1000?

 

[depreciator]

Yep, I mentioned the LVPool and under $300 Assets earlier. Assets over $300 and the building itself are treated pro rata.

 

[Freddie Mac]

Regarding depreciation....some assistance please.

I'm moving into a newly acquired property for around 3 months.

I'll then advertise this for rent and rent it out.

Should I get a depreciation schedule done:

1 - Now while it is my PPOR - but prior to refurb - carpets, floating floor, paint ? (I read somewhere that I can claim for old carperts only if the report is done before they are thrown out)

2. Once the property is fully refurbished BUT before being advertised for rent?

OR

3. Once the property is advertised for rent?


-------------------------------------

A second question -

The property has 3 split system Air-conditioning units. I don't know how old they are. How does the surveyor calculate the possible claim on these? Would it be $1000 x 3 = $3000?

Thanks

ps - can anybody recommend a reputable depreciation company that would maximize my claim?

 

[tess85]

I've used depreciator (see post above yours) before and was very happy with them.

 

[BMT Tax Depreciation]

Regarding depreciation....some assistance please.

I'm moving into a newly acquired property for around 3 months.

I'll then advertise this for rent and rent it out.

Should I get a depreciation schedule done:

1 - Now while it is my PPOR - but prior to refurb - carpets, floating floor, paint ? (I read somewhere that I can claim for old carperts only if the report is done before they are thrown out)

2. Once the property is fully refurbished BUT before being advertised for rent?

OR

3. Once the property is advertised for rent?

Good question, Freddie. You mention claiming on the old carpets that are being disposed of, which is commonly known as scrapping. However, this is only possible when a property is already producing/available for income. If you're getting rid of the assets before it's a rental then you won't be able to do this.

Therefore, if you are going to refurbish before making it available for income then you may as well wait until after the refurbishment, given that no depreciation deductions will be available on any assets removed. We would be able to assess any original fixtures, prior renovations and, of course, include the work that you've done.

-------------------------------------

A second question -

The property has 3 split system Air-conditioning units. I don't know how old they are. How does the surveyor calculate the possible claim on these? Would it be $1000 x 3 = $3000?

During the inspection we would photograph them and then do some research, making sure we assign a maximised value to them that represents their potential to produce income for you according to the ATO's rulings. Their depreciation will begin from your settlement date of purchase regardless of their actual age. They'd each be assigned a separate value and could go into the low value pool when appropriate in order to accelerate the deductions.

ps - can anybody recommend a reputable depreciation company that would maximize my claim?

I could but I'd be a bit biased!