worth getting depreciation schedule

U

ugotadollar4me

Could someone give me some ins and outs with depreciation schedules.

1, Is it worth getting if I bought a property a few years ago and plan to sell it shortly? can I save on the capital gains tax by having this.

2, Lets say I pull down a fence and replace it, no doubt I could claim part of the old fence, (lets just say the old fence is worth $10,000 and my accountant claimed $5,000 of this over a period of time and then I sell the property, will I have to pay the tax back on this and will it work out to be even again? no gain for me.

3, I had a tenant that spent around $50,000 in one of my properties (this one is commercial) by adding in ducted aircon, flooring, ceiling, walls, doors, windows etc. If I have a depreciation schedule done, could I benifit from this to save on capital gains tax when I sell the property?

4, Can depreciation schedules be back dated, if so how far back can they go?
 
Not qualified to answer some of those points, but a resounding "yes" in answer to the thread question.

I have no idea why people want to scrimp on not getting one. They'll be missing out on many times over savings in tax from the tax man.
 
I'll let the quanitity surveyors give you a detailed answer, but perosnally I've yet to see a depreciation report that didn't pay for itself several times over within the same financial year - regardless of the age of the property.
 
It will really depend on when the property was constructed.
I've got a depreciation schedule here for a client's appartment in the Vic Yarra.
Its a new property so there is obvious substantial savings. It's a $500K property 2x2

But the full annual deduction for a full year is a $20K depreciation primarily from the buildings itself (Capital works deduction in tax speak).

I heard they can be back dated to 5 financials years. :confused: Sounds pretty good to me.

Good luck I hope it works out.

SMSFguy
 
They can be backdated but you can only amend 2 years previous of tax returns so.

Generally they are always worth the money. A good depreciator can give you advice on whether your situation warrants it if there is some doubt but I think in your case with a IP that isn't old it's an easy YES!
 
The properties would have been built around the 80's. I have added fixtures and fittings worth thousands.

My biggest question is, lets say I bought the house for $500,000 and a depreciation schedule is done up and there is say $20,000 to right off and I then sell the property for $500,000, will I benifit from having a depreciation schedule $20,000.

Am I thinking correctly, my accountant would take this $20,000 of any profits I made for the year through other sources, then because I sell for $500,000 I would have made the profit back of $20,000 therfore I will need to pay tax on this?
Do you get what I mean
 
I say yes.

My old 50 year old place has depreciation of $3500.

And you can backtrack 3 years I think.

Did it with Scott from depreciators.
 
I will need a depreciation schedule done soon for my rental house in Melbourne. Can anyone recommend a good company or person in Melbourne to undertake this.
Also, I still need to build a deck and have some concreting done on the property, should I wait to complete these last two tasks before getting the schedule done or can I simply provide a list of the costs of these items ahead of timne. I'm keen to get the schedule done ASAP.

thanks
 
ugotadollar4me said:
The properties would have been built around the 80's. I have added fixtures and fittings worth thousands.

My biggest question is, lets say I bought the house for $500,000 and a depreciation schedule is done up and there is say $20,000 to right off and I then sell the property for $500,000, will I benifit from having a depreciation schedule $20,000.

Am I thinking correctly, my accountant would take this $20,000 of any profits I made for the year through other sources, then because I sell for $500,000 I would have made the profit back of $20,000 therfore I will need to pay tax on this?
Do you get what I mean
Click to expand...

I don't get what you mean. Could you re word?

Are you talking about the cost base being adjusted for depreciation?
 
I will need a depreciation schedule done soon for my rental house in Melbourne. Can anyone recommend a good company or person in Melbourne to undertake this.
Click to expand...

Everyone who does Depreciation Schedules does Melbourne.

Also, I still need to build a deck and have some concreting done on the property, should I wait to complete these last two tasks before getting the schedule done or can I simply provide a list of the costs of these items ahead of timne. I'm keen to get the schedule done ASAP.
Click to expand...

Get the Schedule done now and use a company that will update it free when you get the costs for now work.
 
Ed Barton said:
I don't get what you mean. Could you re word?

Are you talking about the cost base being adjusted for depreciation?
Click to expand...



Basically trying to work out the tax side of things, Say I buy a house for $300,000 then say there is $50,000 of depreciations, accountant does his thing at tax time with the $50,000, then I sell the house for say $400,000, so now I will have to pay capital gains tax on the $100,000 profit.
Will I also have to pay tax on the $50,000 seen as the accountant would have made adjustments on this to begin with as I have now made it back in profit?

So basially the accountant wiped off $50,000 for me, house now owes me $250,000 on the books and I sell for $400,000, basically I have now made a profit of $150,000 which I pay tax on. Is this how it works?

Is it only worth getting depriciation schedules if you plan to hold the property and to save tax etc or is there more to it and what else is there
 
It's only depreciation on the building that has a CGT implication. The Assets don't come into it - and often they produce more depreciation in the first five years than the building.
And of course, there is the 50% CGT discount if you hold a property for longer than a year.
And a dollar today is worth more than a dollar in a few years.

But of course I have a vested interest in Depreciation Schedules. I'm understandably chuffed that most people get one.
 
Scott

Good to remember though that the sales price must be allocated between plant and equipment and land and buildings unless otherwise stipulated in the contract. The ato says the apportionment must be reasonable and in practice it is common to apportion the sales proceeds based on the written value of the plant and equipment but this isnt necessarilly a correct apportionment.

The purchase price also needs to be apportioned accordingly as well.

This is often forgetten about. These figures should be able to be obtained from the valuation report.
 
Hi guys,

just bought an IP - built around 1974 with little to no improvements since. It's all in fairly good shape so no intention on replacing Kitchens/bathrooms etc anytime soon. Would a depreciation schedule be of any use at this point in time?

The only improvements we've done to the place are painting and general tidy up
 
depreciator said:
It's only depreciation on the building that has a CGT implication. The Assets don't come into it - and often they produce more depreciation in the first five years than the building.
Click to expand...

As coastymike as already indicated this statement is incorrect.

Depreciable assets are in fact effectively added back to the cost base by virtue of being excluded from the capital cost when the property is purchased and sold. I know that some accountants (and obviously surveyors) don't quite get this but that's the way it is.
 
I think Mike covered it, Gary. As he stated, if depreciation is silent in the contract (and it always is in residential transactions) there needs to be a value placed on the Assets (P&E) upon sale. As Mike stated, most accountants (not him) would use the written-down value of the Assets in the Schedule.
 
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