Leasehold Land

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From: Littlemaze :p


Hi fellow forumites,

Went to see a "guru" last night. He made a comment that got me thinking.

He was saying that when you buy property on leasehold land, the purchase price constitutes the basis for depreciation on your building as buildings depreciate and land does not. As you have not bought any land, the purchase price is what you paid for the building only.

I own properties in the ACT which is leasehold land. To date, I have only claimed building costs (as determined by a QS)as depreciation. Is there any scope to increase my depreciation claims based on purchase price????

Any thoughts?
 
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From: Geoff Whitfield


Littlemaze,

A nice thought. I can't shed any light (sorry).

But it does lead to the thought that in the ACT a 99-year lease is purchased. What is the value of the lease at the end of 99 years? I don't know if it has been explored yet- but older properties in the ACT have "only" 30 years to go.

Theoretically, the government can resume the lease at the end of 99 years- making the value worthless at that time. So the depreciation (if that were the case) would be a tad under 1% pa. And based on purchase price now, and not original purchase price (as is the case with buildings).

But perhaps ATO might not agree.
 
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From: A Jones


There is a pocket of leasehold land in Sydney
(around Manly/Fairy Bower) owned by the Catholic Church (St. Patricks College estate). Properties in this area can sell for anything up to $2m. I think the leases (99 years) expire in 20 years time. Would like to know the tax office's view to depreciating these each year.

A high proportion of barristers and sports professionals live in this area.
 
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