Tax question about renos

A

Anonymous

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From: Anonymous


Hello all,

Last year, my wife and I bought a unit which was built in the 1970s. We are currently living in the unit and paying off the mortgage. This year we have renovated the bathroom & kitchen (they are now brand new).

In the future we plan to move on to buy and live in a house. At that point we will rent out the unit we are currently living in. My question is - once we rent out the unit will any of the renovations we have done be tax deductible in any way , say depreciation? Should we have some sort of evaluation done now?

Cheers

Andrew
 
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Reply: 1
From: Dale Gatherum-Goss


Hi Andrew!

Yes, once the property is available for rent, you can claim depreciation on the renovations that you did.

If you have the receipts, that should be enough and your accountant will work forwards from the date of renovation to the start of the period when the unit became available for rent to know the starting value for depreciation purposes.

No QS evaluation is necessary, although, if you did a lot of the work yourself, you might like to consider getting one done anyway because the QS will estimate a value of your time that would not otherwise be included. Don't tell the QS that you did the work though.

I hope that this helps

Dale
 
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Reply: 1.1
From: Geoff Whitfield


Dale,

"Don't tell the QS that you did the work though"

Very interesting.

Does that make a big difference?

Geoff
 
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Reply: 1.1.1
From: Dale Gatherum-Goss


Hi Geoff!

Maybe, maybe not. The reason I wouldn't tell the QS is that it is their job to estimate the costs involved in the renovations. If they don't know who did the work, they'll factor into the equation an amount for labour. If we tell them that "we" did the work, they might not do so.

Keeps your options open.

Dale
 
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