Common Area
No matter how clear I am with clients and no matter how many times I tell them its really only when they see it for themselves that they can feel the value of a good depreciation schedule.
Yes ..Common areas are shared. So yes you do get a % of the depn on common areas especially car parking, pool services, lifts etc. These can really add up. Even a small duplex style developmnet can benefit from fencing, landscaped gardens, paths and common driveways + letterbox , signage etc. On a bigger scale a 20 floor apartment building will have very significant common areas. JUst watching "The Block"...Whole bottom floor, pool, BBQ, 80 inch LCD TV, paving, fire services, alarms, lighting, window covering,m signs, glass walls, foyer, water feat etc....Plus top garden deck area. All shared 4 ways.
This leads me to a comment I have heard many repeat over the years....Beware of buildings with significant capital works deductions. They comprise depreciable assets rather than appreciable assets. A house on land sits on a 100% appreciable asset. Dont buy a property for its tax write-offs. Buy it for its potential future improved value. Be your own judge - I'm on the fence.
Yes ...If there are improvements to a property it may be viable to update the schedule if major works are completed by the strata. Does that mean its a double dip ie deductible levies AND improvements ?? Sadly no. Special levies / sinking funds for cap works are NOT tax deuctible to strata owners as these will be utilised for major works incl capital works such as concrete cancer etc. So there is no double dip. Only ordinary levies are deductible.
One thing to watch when buying into a Strata. Check that levies will cover the expected works. A colleague recently didnt buy when he discovered major structural issues in Strata mins. Apparently likely to cost $50K per strata. Levies held were nowhere near sufficent. ..Explained the cheap price. People were bailing out to avoid the cost.
What about when you sell....A CGT adjustment is required for capital allowances claimed. Yep. That reduces the cost base so that lets assume cap allowance sof $10K have been [reviously claimed the capital gain will be $10K higher. BUt remember most taxpayers get a 50% CGT discount so its still good value.