Ride on mower

[asy]

Quick question for you all:

A friend of mine has an IP on an acre, and it is about to be tenanted. He is considering supplying a Ride on Mower as part of the rental (Purchasing the mower and housing it at the property, but going there and mowing it himself, or perhaps leaving it for the tenant to use, not sure yet).

How does this work Tax wise?

Is the mower depreciable, and if so, over how long?

Would it be better to purchase the mower outright, or purchase it using LOC then repaying it with interest (From a tax point of view, not necessarilly from a cashflow POV)?

Has anyone done this, and did it work well, or are there horror stories?

Does anyone have any comments regarding this idea?

(Just as an aside, assume mower costs 5k and having someone mow the property is $100 per mow *not exact figures, but here for working with)

Thanks guys!

asy

 

[DaleGG]

Hi Asy

Yes, a ride on mower is depreciated over its useful working life. I'm afraid that I don't have the depeciation rates at home with me. Sorry.

Have fun

Dale

 

[geoffw]

To pick up on one point

Would it be better to purchase the mower outright, or purchase it using LOC then repaying it with interest (From a tax point of view, not necessarilly from a cashflow POV)?

I would suggest this depends on whether he owes money on his PPOR. And I'm assuming from the question he has money to pay for the mower if he wants.

Scenario 1. He pays cash for the mower. He depreciates it. End of story.

Scenario 2. He owes money on his PPOR. He pays the $5K off his PPOR. He purchase the mower using his LOC. He depreciates the mower- and the interest on the LOC is also claimable. Not just this year, but subsequent years. So he's converted $5K of non-deductible debt into $5K of deductible debt. OK, not big bikkies- but if he kept on doing this, he could convert a lot of PPOR debt into deductible debt.

 

[paulzag]

Or he leases the mower.

Or commercial hire purchase.

Definately he should call his accountant.