Reply: 1
From: Les .
G'day Mannie,
The actual depreciation (Capital Allowance) % is identical, but there are a couple of things you need to be aware of.
1. An IP can be depreciated at 2.5% for 40 years, BUT those 40 years start at the date of building it. So, you can claim only 30 to 35 years of it, if it is 5 to 10 years old when you buy it.
2. The Capital Allowance is based on the cost of building it when it was built. So, for a 10 year old house, that cost might be only 50% of the cost of building a new one today.
3. And, if you sell it, any amount depreciated is tacked back on to your profit for CGT purposes. But you weren't going to sell, were you ;^)
Then there are all of those other Capital expenditures (like replacing a fence that was falling down when you bought the place, a new garage, and a patio) - they are also able to be claimed at 2.5% where they are not deemed to be a "repair".
I think someone (Duncan M?) put the Rental Properties Handbook in the answer to a recent post. If that doesn't cover it, there also used to be a "Depreciation Handbook". Is that still available on the ATO site, people?
And I'm NOT an accountant or other qualified person - these are just my opinions ....
Regards,
Les
- "Eschew Obfuscation" - ;^)
