How to avoid paying CGT on previous claimed depreciation

Hi Guys,
Many thanks for any assistance which you can offer me.
I bought my first IP in 2008 in Gunnedah. Unfortunately paid too much for this ($285000) and it has been sitting there without any rise in capital gains. A recent valuation performed came back as $265000.
We would be hopeful in getting $285000 if we sold this, and would lose on closing costs paid.
We are thinking of selling this property as our strategy has changed and we'd prefer to not have the possible worries of a vacant property whilst investing our money in other projects. The fact that this money isn't really doing anything is our main motivator.
It was 18 months old when we first purchased it. We have claimed >$10000 on building depreciation per year.

My understanding is that if we decide to sell this, the depreciations which we have previously claimed are added to the sell price to calculate capital gains tax.

I have been told that it is possible to have a statement in the contract explaining that the property is being sold in a condition, according to the depreciation schedule provided. Ie that all the fittings/inclusions are in a depreciated state according to the schedule. Or something similar to that effect to avoid the clawback.
This then excludes the requirement of paying tax on the depreciated values.

We want out of this property but uncertain how to walk away with our deposit intact.
 
I don't think any such schedule will convince the ATO to let you get two bites of the cherry (claim annual depreciation, and claim the property's value has remained the same).

Best bet would be to get receipts together for all legitimate capital and lending costs and add these your cost base to legally reduce the CGT.
 
I think you have two different issues:

1. Depreciable items excluding the building - you can nominate the sale price of these is there current written down value.
2. the building write off amount. This is the amount that gets added back on to calculate CGT
 
There doesn't appear to be any CG. Are you trying to maximise the loss?

What happens is that the cost base is reduced by the Division 43 allowances, so in effect say it was $10000 per year for 5 years the cost base would be reduced to $235000.

However, I agree with you that the there is not likely to be much CG. Based on the $285000 purchase price, then the 2.5 per cent "building depreciation" is likely to be a maximum of $6000 a year, which would reduce the cost base to $255000 and then after the acquisition and disposal costs are added on if the OP can sell for $285000 there would be minimal capital gain particularly when adjustments are made for the depreciable items
 
Can you please expand on this?

Say the QS valued the carpets at $10000 when you acquired the property your written down value now might be say $1000 and your contract would say that depreciable items included in the sale are deemed to have a sale price equal to your written down value.
 
Say the QS valued the carpets at $10000 when you acquired the property your written down value now might be say $1000 and your contract would say that depreciable items included in the sale are deemed to have a sale price equal to your written down value.
Thanks.
So that means that depreciated $9000 doesn't need to be added to the sold price?
Are they any drawbacks?
 
Expanding on that example ig the qs report when you purchased showed carpet worth 10k then the allocation will be

land and buildings $275k
plant and equipment $10k

On sale assuming you sold for 285k

land and buildings $284k
plant and equipment $1k

Capital gain is $284k less $275k.

This doesnt account for division 43 write backs

any selling costs would reduce the capital gain
 
Say the QS valued the carpets at $10000 when you acquired the property your written down value now might be say $1000 and your contract would say that depreciable items included in the sale are deemed to have a sale price equal to your written down value.

There is no deeming of sale price as written down value. However, the legislation may deem market value proceeds when parties are not dealing at arm's length.
 
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