Depreciation Report on PPOR?

T

TheBacon

Hi all

Have been out of town for 2 yrs, rented out PPOR. Will be back soon.

We did not have a depreciation schedule on the PPOR and did not claim any depreciation on the house whilst away/renting it out. Should i get one and get my accountant to back-date claims?

We will be renovating this year. However we have no plans to move in the next few (at least 2) years.

Should I get a deppreciation report now? Or wait until I move in few yrs?

TB
 
Most QS will gurantee that you get more back than the cost of the report. So what have you to lose?

Search for Depreciator - he did mine and is very good.

Cheers,
 
TB,
It's certainly worth considering, especially if the property was built post July 85. It's much easier to amend 2 years' worth of returns than 4 years' worth.
When you say you intend renovating, I presume that means after the property again becomes your PPOR? If you're renovating a rental property, it's an idea to get a value ascribed to the Assets (fixtures and fittings) that you are throwing out.
Scott
 
depreciator said:
TB,
It's certainly worth considering, especially if the property was built post July 85. It's much easier to amend 2 years' worth of returns than 4 years' worth.
When you say you intend renovating, I presume that means after the property again becomes your PPOR? If you're renovating a rental property, it's an idea to get a value ascribed to the Assets (fixtures and fittings) that you are throwing out.
Scott
Click to expand...

Yep - AFTER it becomes PPOR again. I considered doing it before but time constraints meant I could not.

It seems the collective wisdom says get the depreciation report

Ta

TheBacon
 
It seems the collective wisdom says get the depreciation report
Click to expand...

As I said, it's worth considering. The value in getting it done will depend in part upon the age of the property and how long you lived in it before renting it out. A reputable QS will always be happy to chat and let you know whether they feel it will be worth your while commisioning a Schedule.
Scott
 
Two Depreciation Reports

TheBacon,

Obviously you are contemplating getting a depreciation schedule prepared. If I may offer some advice? Why not get two depreciation schedules done?
A pre and post renovation report. There are however a number of questions that need to be asked to make this a viable option however a few details such as original purchase date and your initial scope/size of your proposed renovation will almost suffice.
Let me explain with a quick example.
Hypothetically the scenario is; you purchased this property 4 years ago and rented out for the past two.
example; a depreciation report is prepared with a start date of 4 years ago. At this time the carpet starts depreciating with an opening value of $2000.
Whilst the house was your PPOR for the first two years and you rented out for the last two years considering the effective life of carpet is 10 years and using the prime cost method (easy to calculate) you can claim $200 each financial year that it is producing income. In this situation you total $400.
Here is the exciting bit. After the four years you decide to tear up all the carpet and polish the floor boards ie part of your renovation. At this time the (WDV) or written down value of the carpet is $1200. Assuming you do not sell the carpet and it goes in the skip bin, you are entitled to claim the residual value or balance if your like, left on that carpet. As you can see this can be a very lucrative means reducing the cost of a renovation. A lot of investors are unaware of such benefits and will only engage a QS to prepare a depreciation schedule after a renovation is completed.
If there is any questions please post them or alternatively you can call me on 1300 728 726
 
Yep - AFTER it becomes PPOR again. I considered doing it before but time constraints meant I could not.
Click to expand...

David, TB is doing his reno after he moves back into the house and it again becomes his PPOR. Let's not get him too excited.
 
depreciator said:
David, TB is doing his reno after he moves back into the house and it again becomes his PPOR. Let's not get him too excited.
Click to expand...

Mr Scott and Mr David;

What if TB was to rent the property out say on a 6 month contract can TB utilise your method of claiming $1200 on carpet and all the other WDV (i like your abbreaviations Mr David) on all the other items?

If this is the case i would weigh up the benefits of doing both scenarios... food for thought TB.

Mr Farone.
 
If the work is done while the property is still a rental property i.e. before he moves back in, it works in TB's favour in terms of claiming the residual depreciation.
Just on that, I've mentioned before that if you rip up carpets and polish the floors in an IP, the cost of sanding and polishing can be claimed as a repair. That's because essentially the floor is being returned to it's original condition i.e. without coverings. Not many people would know this. There is an ATO ID on it.
Scott
 
hmm.

The depreciation report would need to stack up in terms of benefit it can supply just for the past 2 years.

Unless...
My tenant moves out on the 10th, I move back on the 16th. Technically the place is available for rent until the 15th!!! I could get some things demolished in the mean time...

Ah - just pulling your legs - not seriously considering this convoluted, difficult to defend strategy ;)

For background/info. Prop built in mid 1950s. Brick/veneer, 3br. Purchased 2000 July. Some extra work - paving at back, render front and back, new aircon, repaint throughout (including kitchen benches - I subscribe to the White Knight low-cost reno school). Purchase price $130k (worth a lot more now, thanks to recent/curent boom).

I had one side of the fence replaced in 2005 - I think here a dep/sched will help. I have photos of the old crappy fence - just need to sort out whether I can claim it as a repair or replacement and depreciate.

late. must go

TB
 
depreciator said:
if you rip up carpets and polish the floors in an IP, the cost of sanding and polishing can be claimed as a repair. That's because essentially the floor is being returned to it's original condition i.e. without coverings.
Click to expand...
But if I've bought a place with carpets, and ripped them up and polished the floors, then is it an improvement? I'm not restoring them to the condition when I bought it- would it then be an improvement? Or might that depend on how long I've had the place (ie if I've had id more than 1 or 2 years then it might be argued it's a repair anyway)?
 
TB, I'd be wary of demolishing anything, but if you, say, toss out the carpet and the stove, before you move back in you could be okay. It's one to run past your accountant.
Regarding the fence, if an entire fence is replaced it's an improvement i.e. depreciable at 2.5%. If a section of a fence is replaced, it's a repair. That's why if ever at all possible it's good to renew a fence in sections over perhaps a couple of years.

Geoff,
That ATO decision re: polishing floors is ID 2002/330. In part it states:
"Polished floorboards perform substantially the same function as the carpet. The materials and processes used in the repair do no more than restore the floor to a functional walking surface. Replacing worn carpets in a rental property by polishing the floorboards does not materially alter the character or functionality of the rental property....
Removal of the carpets and polishing of the floor is a repair."
 
TheBacon said:
Unless...
My tenant moves out on the 10th, I move back on the 16th. Technically the place is available for rent until the 15th!!! I could get some things demolished in the mean time...

Ah - just pulling your legs - not seriously considering this convoluted, difficult to defend strategy ;)

TB
Click to expand...

Question! May I ask why not?
 
BMT & Assoc said:
Question! May I ask why not?
Click to expand...

Physics - time and space.

Tenant moves out 10th. I move back in 16th.

I am in Geraldton - house is in Perth - 450kms away.

Otherwise I would do a few things like; buy new stove and rangehood. buy new bathroom vanity and remove the old ones.

Whatever was quick and easy.

Hmmm. Late night thinking.

I'll let you know how I go.

Will definetly get a Dep/sched though

Thanks all

TB
 
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