Scrapping assets and tax claim

[Holmes2012]

What are the thoughts on claiming deduction for a kitchen that one would scrap/dispose. Say the Depreciation report valued it at $5,000. Investor puts in a new one at $15,000.

Does it mean in Year one, the claim will be $5,000 + Depn on the $15,000?

If yes, that would also suggest the cost base goes down by $5k for the kitchen disposed?

 

[Paul@PFI]

First the property must have been rented either side of the new improvement. And you have a QS report with a residual value for the old kitchen at $5k.

Yes you write off $5k and its deductible. Its likely to comprise multiple assets incl oven range, cooktops, benches, tiling ?? The new kitchen then starts depn on the $15K (and / or cap allowance). If its done in June it wont be a lot however !!

Yes the cost base is reduced when your write off OR claim depreciation / cap allowances if you acquired property after the relevant date in 1997.

I would have your QS report updated for the new costs and the former scrapped assets. Worth checking with the QS or tax person before acting.

 

[Holmes2012]

Thanks. Makes sense and thought so.

Do you think it will apply to say fence that is purely capital works deduction. ie if old fence is removed and new one put in, will old be available for upfront deduction?

 

[depreciator]

Depends on the age of the old fence. To claim the residual value on the disposal of Capital Works i.e. building stuff, it needs to have been built after Sept 87.