Depreciation schedule... 7 years too late?

[Bran]

Hi folks,

Having a fairly ignorant view of my first IP, I never arranged a depreciation schedule - I figured it was all pretty old (1960s brick house), and the only thing new were the air conditioners which I have been claiming depreciation on, but that's it.

This was probably the wrong decision, as there are clearly many other things I could have claimed.

So my question is whether I have missed the boat some 7 years down the line? Can I claim or recoup the things I've missed, or claim retrospectively? (would hardly seem worth the effort)?

Would it still be worth paying for a schedule?

Im trying to drag it CF+, but not quite there and kicking myself.

 

[depreciator]

Well, you possibly have missed the boat, but if it's any consolation it wasn't a fabulous boat.
The property is too old for there to be any depreciation on the building - unless a previous owner did a big reno.
That leaves you looking for depreciation in the existing Assets: appliances, floor coverings etc. They would have been ageing when you bought the place, and they have been losing value for the last 7 years while you have been renting out the place.
Today, they won't be worth much.
Do you have any photos? Send them to me and I'll tell you what I reckon. We might be able to do something.

Scott

 

[Paul@PFI]

Hi folks,

Having a fairly ignorant view of my first IP, I never arranged a depreciation schedule - I figured it was all pretty old (1960s brick house), and the only thing new were the air conditioners which I have been claiming depreciation on, but that's it.

This was probably the wrong decision, as there are clearly many other things I could have claimed.

So my question is whether I have missed the boat some 7 years down the line? Can I claim or recoup the things I've missed, or claim retrospectively? (would hardly seem worth the effort)?

Would it still be worth paying for a schedule?

Im trying to drag it CF+, but not quite there and kicking myself.

Not quite time to throw in the towel. Don't quit.

There is a 2-4 year amendment period. You would need to understand which - 2 or 4 years. Then get the QS report based on that. Then amend tax returns. If you are getting the schedule done then do it right and amend. It may pay for the schedule in one go.

 

[BMT Tax Depreciation]

Yes, as depreciator said, there wasn't a whole lot there to depreciate. If it was an unrenovated property you might have seen $1500-$3000 in first-year deductions depending on size/assets. But for a pre-1987 property I usually say that 5-7 years of ownership is the borderline period for a depreciation schedule still being worthwhile. It could go either way and, even if you do come out in front, it won't be by a massive amount at this stage. Call it a learning experience?

 

[Terry_w]

I think people not claiming depreciation properly is pretty common.

 

[depreciator]

Breaks my heart.

 

[Rixter]

I think people not claiming depreciation properly is pretty common.

Breaks my heart.

Yeah, I read that one in five investors have never even heard of Quantity Surveyor before, let alone know what one does and there is literally $millions each year lost to the ATO in unclaimed deductions because of it.

 

[INVSTOR]

I've always been confused by this comment from my accountant (who has since left firm).
Even if you don't claim depreciation, when you sell the property, you need to include the amount of depreciation when calculating gain/loss. If you've never claimed it or had depreciation schedule, how does the accountant know what amount for depreciation calculation when disposing of asset?

 

[Rixter]

I've always been confused by this comment from my accountant (who has since left firm).
Even if you don't claim depreciation, when you sell the property, you need to include the amount of depreciation when calculating gain/loss. If you've never claimed it or had depreciation schedule, how does the accountant know what amount for depreciation calculation when disposing of asset?

I've never heard of that before.

My understanding is if you've claimed depreciation then that is the case..

I think the accountant had it wrong, which could be why the accountant is no longer with the firm.

 

[Paul@PFI]

I've always been confused by this comment from my accountant (who has since left firm).
Even if you don't claim depreciation, when you sell the property, you need to include the amount of depreciation when calculating gain/loss. If you've never claimed it or had depreciation schedule, how does the accountant know what amount for depreciation calculation when disposing of asset?

Yes that sort of true. I say sort of.
1. Why would you choose not to claim it ? A cap allowance claim is always 50% better than not making one.
2. Its only in respect of capital allowances for which you "could" claim a deduction. So it becomes a PPOR that rule is avoided. A plain English explanation is here. Note the relevant dates !!

If you have never had a schedule this rule doesn't operate. I come back to item one...Only worse than someone without a schedule is one who has one and chooses not to claim a deduction.

There is a single reason I have encountered where a taxpayer may choose not to claim a deduction. I still believe its flawed. Its where they have a deductible super contribution that may cause a tax loss. There are better ways to address that problem...many of them. Changing the deduction is one providing you aren't out of time. Increasing income is another and lastly choosing to not claim other types of deduction (eg interest) may be prudent. This issue used to occur with deductible gifts too but you can elect to spread those deductions into future tax years. One of the few changes made by Swan that didn't harm taxpayers.

 

[Tano]

I've always been confused by this comment from my accountant (who has since left firm).
Even if you don't claim depreciation, when you sell the property, you need to include the amount of depreciation when calculating gain/loss. If you've never claimed it or had depreciation schedule, how does the accountant know what amount for depreciation calculation when disposing of asset?

That used to be the case but it was unfair and now the rules have changed. It does not get removed from cost base if you didn't get a depreciation schedule.

PSLA 2006/1

 

[cadence]

Hi I did that! I was young and it was my first IP. Realised a couple years later. Didnt bother with the ITR amendments but I'm still claiming a couple hundred bucks in the last couple years ... might be finished by next year.

I think you should call the depreciation report company and tell them your situation. Sometimes they offer a service which dispenses the need for a physical inspection. You can just take photos and send it to them to reduce the cost of the report. They will tell you if its worthwhile getting the report.

 

[INVSTOR]

Yes that sort of true. I say sort of.
1. Why would you choose not to claim it ? A cap allowance claim is always 50% better than not making one.
2. Its only in respect of capital allowances for which you "could" claim a deduction. So it becomes a PPOR that rule is avoided. A plain English explanation is here. Note the relevant dates !!

If you have never had a schedule this rule doesn't operate. I come back to item one...Only worse than someone without a schedule is one who has one and chooses not to claim a deduction.

There is a single reason I have encountered where a taxpayer may choose not to claim a deduction. I still believe its flawed. Its where they have a deductible super contribution that may cause a tax loss. There are better ways to address that problem...many of them. Changing the deduction is one providing you aren't out of time. Increasing income is another and lastly choosing to not claim other types of deduction (eg interest) may be prudent. This issue used to occur with deductible gifts too but you can elect to spread those deductions into future tax years. One of the few changes made by Swan that didn't harm taxpayers.

That used to be the case but it was unfair and now the rules have changed. It does not get removed from cost base if you didn't get a depreciation schedule.

PSLA 2006/1

Thanks for clarifying!