Purchased First IP - what now?

[dublin_101]

Hi All,

Just purchased my first IP and am very happy - yet now come the hard lessons.

It is a weatherboard home in relatively decent condition, except it needs to be restumped which will cost me about 7k.

My plans are as below:

1) lightly renovate the existing home, paint, new kitchen and bathroom and restump.

2) rent out and hopefully get better quality tennant and decent rental return

3) then do plans and permits for development at back, etc.


4) fast forward 2-3 years, hopefully I'll have two properties (one old and one new)

My main questions are regarding depreciation, etc. I'm seeing a lot of mentions in these forums regarding Depreciation Reports and Quantity surveying.

My main question is basically, do I need to get a depreciation report and or quantity surveyor report for a property which is pretty old as it is? If so, what are my reasons for doing this?

Any tips will be appreciated. Thanks in advance.

 

[Paul@PFI]

A QS / Depreciation / report is one and the same. Ideally buy it from a firm that specialises in tax depreciation reports. Big ones are Depreciator and BMT...Google it.

You don't need it but it could provide significant deductions for a fixed once only small outlay that is tax deductible. Discuss with the firm on its merits and value in advance.

There are two deductions form the report.
1. Depreciation of fixtures and fittings and plant; and
2. Capital Allowances. A 2.5% deduction for the writeoff the actual original construction cost

Note if its a strata etc you also get deductions for common property.

Some of these deductions reduce the CGT cost base. Keeping it simple if you have claimed $20K of these deductions you cost base reduces $20K and so $10K more is taxed...But the 50% discount still benefits.

Keep reliable records / summaries so you don't miss a thing. Deductions may be available in the settlement sheet and the loan docs too...

The restumping wont be deductible. That's what's called an initial repair. The cost base would be increased so future CGT is reduced however.

 

[mkilroy]

You should ensure you get a Tax Depreciation report done on the purchase of the property no matter how old. The additional works you will be carrying out will also be included within your Depreciation Schedule.

 

[nhg]

You should ensure you get a Tax Depreciation report done on the purchase of the property no matter how old. The additional works you will be carrying out will also be included within your Depreciation Schedule.

We are a national provider of Tax Depreciation Quantity Surveyors who carry out site inspected report for $445+GST. Please get in touch with us at www.koste.com.au alternatively please contact 1300 669 400 where a member of our team would be more than happy to assist.

That's cheap, but cheap is not always best. Not a personal punt, just a generic point.

I use depreciators. Reports are more expensive for site visits but it's been worth every cent so far.