depreciation report on an older house

[tigerGT]

IP ready 4 rent - Do I need a depreciation report??

Hi Guys,

I am just abut to rent out my 2nd IP that I settled on over 1 month ago. I have just finished renovations on the place. It was a corner house with a granny flat at the rear. I have sort of converted it into two seperate lots and will rent it out seperatly. The rental appraisal came in and I am happy with the results.

My issue is that over the years on sommersoft I keep hearing about depreciation reports however I never actually bothered to pay too much attention as I always thought it was for newer properties. Just recently found out that renovations can count towards deperciation schedule..

I guess what im trying to find out is whether I should organise a depreciation report on the place before I rent it out? IP will be negatively geared with me and wife so the more costs the better at this stage.

The before and after shots are below on the renovations completed...

http://picasaweb.google.com.au/gachram/BeforeAndAfter

 

[WashingtonBrown]

Hi George

If you tell me your total spend....i can you give you a ballpark of the likely allowances if you like?

And yes get it done before you rent it out....so you dont annoy the new tenants with an inspection!

Regards

 

[tigerGT]

Hi WashingtonBrown,


Thanks for that. I spent between 15k and 17k on both the house and granny. Are the allowances only for a set period of time (ie 7 years? ) or can they only be claimed for one year?

thanks again

 

[ok180]

Do it.

i own a house that is 140 years old and they still gave me a few $$$ over the next couple of years. Mine had been renovated a bit here and there over time much like yours has.

 

[WashingtonBrown]

Hi WashingtonBrown,


Thanks for that. I spent between 15k and 17k on both the house and granny. Are the allowances only for a set period of time (ie 7 years? ) or can they only be claimed for one year?

thanks again

Hi Tiger

I would say the first year would be somewhere between 2k to 3k depending on what proportion of the cost where Plant and Equipment type items.

The plant items will have varying effective lives that will depreciate on that basis - but the structure will be depreciated over 40 years.

Note even though the furst year may be 3kish...there will be a quick drop off in subsequent years.

Cheers

 

[tigerGT]

Thanks for that, I am going to do some more reading about it but will defintely go on with it. Going to read some related posts on the issue. And by Plant and equipment you mean like installs like kitchens etc?

P.S your web site seems to be down today. I cant get to it. I was hoping to get more info from there.

thanks

 

[geoff stower]

property depreciation schedule

Much better value to pay a professional to write a report on the depreciation, comes in yearly amounts , Accountant then follows the pages to gain the maximum depreciation.
Geoff

 

[WashingtonBrown]

Thanks for that, I am going to do some more reading about it but will defintely go on with it. Going to read some related posts on the issue. And by Plant and equipment you mean like installs like kitchens etc?

P.S your web site seems to be down today. I cant get to it. I was hoping to get more info from there.

thanks

Its back up today...we had some "technical difficulties"!!

Plant and Equipment...i mean carpet, oven dishwashers blinds....

Kitchens these day, unfortunately and incorrectly in my opinion, have been deemed to have an effective life of 40 years...ie part of the bld and hence attract 2.5% per annum.

Cheers

 

[Nanuq]

what about buying a freshly renovated old house? How can they find out how much to depreciate without having the vendor to provide you original receipts for the renos?

 

[depreciator]

Easy. A quantity surveyor has to estimate the cost of the work done by the previous owner. A renovation date is handy.
Scott

 

[pulse]

be careful though, doesn't the ATO require you to take reasonable steps the find out the value of renos.

ie ask the vendor for prices/contracts if the place was recently renovated or if you renobate the place yourself, it is not acceptable to get a QS report to value the renovation at builders rates.


Pulse