When is best time to get Depreciation report
- Thread starter eggnog
- Start date
I get mine done after the reno - otherwise how else will the QS doing the report know what to depreciate?
Investigate a bit further also - because I have heard in my travels about ppl getting depn schedules done on settlement / before reno - I think they depreciate all the stuff they rip out and toss, as well as getting one done post reno for on-going depn.
It is an tax deductable expense whether done before or after.
Hello All
FYI firstly disclaimer: I reply as someone who undertakes depreciation schedules inspections for Depreciator, whose owner Scott is a regular contributor to this Forum as Depreciator
http://www.depreciator.com.au/driver.asp?page=main/home
So in answer your questions there are some facts to consider however Scott is uber expert on fine points of the law so I will PM him to check my post.
Now, a clarification…
Q. Is it rented before or after the reno?
A. If not rented, then all work are capital improvements made to rent and must be depreciated.
A. If it was rented, then some items may be classed as repairs and written off fully in that year. Example, repair a fence with replace of new palings, etc. and it is repair and claimable 100%. Dead ceiling fan, repaint, ditto. This is better for you.
In short it most often better to rent, and then undertake Reno, assuming it is rentable and not a dump.
So on this basis, like most IPS, it is rented before reno then two options:
Get schedule ASAP and then amend yourself by self entry. Depreciator allows for minor fee to update a schedule yourself. I assume the others do as well. Surprisingly many don’t know or do this, losing out on a higher rate of depreciation if say, you replace a stove valued at $200 and new on valued at say $800.
Or
Wait until you have the reno then provide the inspector with dates and/or value (receipts are best) of the works so he/she can incorporate into the overall schedule. More details the better!!! Note: you can backdate 5 years from memory.
How important are details?
I did a home mid-year built 1880. No depreciation here. Why bother??? New owner knew of a major $45k reno in 2005, and owner had provided lots of furniture so depreciation here but still not much?!? ahhh...this is where a good inspector/company will save you $$$.
Furniture provided in 2008, so depreciation here for longer period than 2005. From inspection it was clear the original house has been repainted, restumped and reguttered etc.. but that was not listed in the 2005 Reno. (Owners only list the essential to get approval and lower the fee). Also no comment on the new garage and footpaths and fence.
So a bit of hunting with Council and (in this case) the old owner notes passed on, name tags of installers, etc... Found dates and/or value for these works. Some of the 2005 works were actually bought and installed in 2007. More yesrs left. Restumping was $10k, reguttering $6k, and garages $15k from memory. It all adds up! Doubled the schedule in this case.
So the schedule ends up having entries for number of years. It seems complex but the ‘puter crunches it all and bingo, Better Write Off!
Disclaimer: I will say however I and Scott are a bit obsessive being IP investors ourselves. I am not sure if others check dates etc... And I do schedules in Country Vic where the Councils don’t feak out on giving details over the phone when you call. City Councils sometimes don’t care or want to charge a fee for your info!
Lastly: obviously takes more time so consider that when getting quotes for the schedule.
A bit off the actual question but I hope this helps,
Regards Peter 14.7
FYI firstly disclaimer: I reply as someone who undertakes depreciation schedules inspections for Depreciator, whose owner Scott is a regular contributor to this Forum as Depreciator
http://www.depreciator.com.au/driver.asp?page=main/home
So in answer your questions there are some facts to consider however Scott is uber expert on fine points of the law so I will PM him to check my post.
Now, a clarification…
Q. Is it rented before or after the reno?
A. If not rented, then all work are capital improvements made to rent and must be depreciated.
A. If it was rented, then some items may be classed as repairs and written off fully in that year. Example, repair a fence with replace of new palings, etc. and it is repair and claimable 100%. Dead ceiling fan, repaint, ditto. This is better for you.
In short it most often better to rent, and then undertake Reno, assuming it is rentable and not a dump.
So on this basis, like most IPS, it is rented before reno then two options:
Get schedule ASAP and then amend yourself by self entry. Depreciator allows for minor fee to update a schedule yourself. I assume the others do as well. Surprisingly many don’t know or do this, losing out on a higher rate of depreciation if say, you replace a stove valued at $200 and new on valued at say $800.
Or
Wait until you have the reno then provide the inspector with dates and/or value (receipts are best) of the works so he/she can incorporate into the overall schedule. More details the better!!! Note: you can backdate 5 years from memory.
How important are details?
I did a home mid-year built 1880. No depreciation here. Why bother??? New owner knew of a major $45k reno in 2005, and owner had provided lots of furniture so depreciation here but still not much?!? ahhh...this is where a good inspector/company will save you $$$.
Furniture provided in 2008, so depreciation here for longer period than 2005. From inspection it was clear the original house has been repainted, restumped and reguttered etc.. but that was not listed in the 2005 Reno. (Owners only list the essential to get approval and lower the fee). Also no comment on the new garage and footpaths and fence.
So a bit of hunting with Council and (in this case) the old owner notes passed on, name tags of installers, etc... Found dates and/or value for these works. Some of the 2005 works were actually bought and installed in 2007. More yesrs left. Restumping was $10k, reguttering $6k, and garages $15k from memory. It all adds up! Doubled the schedule in this case.
So the schedule ends up having entries for number of years. It seems complex but the ‘puter crunches it all and bingo, Better Write Off!
Disclaimer: I will say however I and Scott are a bit obsessive being IP investors ourselves. I am not sure if others check dates etc... And I do schedules in Country Vic where the Councils don’t feak out on giving details over the phone when you call. City Councils sometimes don’t care or want to charge a fee for your info!
Lastly: obviously takes more time so consider that when getting quotes for the schedule.
A bit off the actual question but I hope this helps,
Regards Peter 14.7
Peter thank you. I think will get my schedule done after the reno.
As you are a specialist may be you can advise a link on the list of items I can depreciate I have a small one but is there any full-full list covering every single item under depreciation scheme?
And thank you once again for such a full answer
As you are a specialist may be you can advise a link on the list of items I can depreciate
I have a small one but is there any full-full list covering every single item under depreciation scheme? And thank you once again for such a full answer
Thanks
For a list go to
http://www.depreciator.com.au/driver.asp?page=main/depreciable+items
Two rates apply:
To be simple, everything that devalues is depreciable. Simply keep a list.
Peter
For a list go to
http://www.depreciator.com.au/driver.asp?page=main/depreciable+items
Two rates apply:
- for the building/capital: 2.5%
- for the fittings 4%
To be simple, everything that devalues is depreciable. Simply keep a list.
Peter
is there any full-full
The ATO site has one:
http://www.ato.gov.au/content/downloads/IND00133187n17290608.pdf
(see towards the back of the report for long lists)
got another Q. In this full reno I am doing there will be a lot of items that I am ripping out and bining - old carpets, curtains, kitchen, doors, chairs, couches, tables, fly screens, etc. I understand that any item that is ripped out/demolished can have the remainder of their life value deducted in that one year. If so, should I just keep a pile of the items I will bin in the front yard for the QS or is it ok to bin straight away and give him a list of items demolished.
The kitchen and doors are 'building', so they will have to have been installed after July 85. And to claim any of the value of Assets upon disposal, the place must have been rented out for a while i.e. you must have been earning income from them.
The QS is going to want to see them - photos in situ might suffice. Talk to your QS.
Scott
Is a Depreciation Schedule still useful for older houses?
Hi Guys,
I have an investment property in Kuranjang, Melton.
It is about 17 years old and has not been renovated in any way, although a reasonably new split system air con had been installed in the living room.
Would there be any benefit to doing a depreciation schedule here? how old is too old?
(I also have an IP in Frankston but this one is around 40yrs old, with some cosmetic reno's but nothing major).
Cheers,
Hi Guys,
I have an investment property in Kuranjang, Melton.
It is about 17 years old and has not been renovated in any way, although a reasonably new split system air con had been installed in the living room.
Would there be any benefit to doing a depreciation schedule here? how old is too old?
(I also have an IP in Frankston but this one is around 40yrs old, with some cosmetic reno's but nothing major).
Cheers,
I would say yes.
In 1991 it cost about $700m2 so 150m2 equals $100k ish but at a quick calc. The HWS is probably newer than 17 years , maybe stove etc..
Peter
