Depreciation on Investment Property Tax Deduction

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  oscargamer on 17/01/2016 - 10:15

  +1

  best talk to a company that does building surveying

  my understanding (and we did this), you can only depreciate things after a surveyor's report, as that gives a starting point from which you work - i don't think you can do it retrospectively (as the tax deductions apply differently year on year)

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  altomic on 17/01/2016 - 10:49

  Deductions for depreciation are from new and can be amortized over a certain period according to tax law.

  But don't listen to me. Hit up the ATO at this page and get further info

  And here's a page for downloading the relevant info from the ATO

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  CyberMurning on 17/01/2016 - 12:10

  Most people (and property agents) don't realise all the depreciations claimed need to be email back when owner sell the property in the future.

  • 

    robbyjones on 17/01/2016 - 21:07

    Emailed back to whom?

    • 

      CheapskateQueen on 17/01/2016 - 21:23

      +1

      i think s/he means "clawed" back because you're meant to do a balancing adjustment if you've claimed depreciation on any asset that you then sell

      • 

        CyberMurning on 17/01/2016 - 22:37

        Sorry typo.
        Need to be paid back when selling.. Yes thanks queen.

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  Smulder on 17/01/2016 - 12:10

  +1

  Any capital works allowance you claim on your property reduces the cost base when it comes time to sell it. So if you do go and claim a big deduction, it will be offset by a greater capital gain. If it wasn't for the 50% CGT discount, you would be no better off, and even with it, you probably won't be as better off as you are hoping.

  Claiming 26 years worth of depreciation and capital allowance this year in your rental schedule will raise flags with the ATO, as you will have a huge rental loss. The proper way to do it would be to amend all the prior year returns. Which would be a headache.

  And yes, the ATO would like to see your justification for the value you are claiming, which is why most people use a quantity surveyor. Otherwise, you will be just guessing the amount, which is a risk if you were ever audited.

  Unfortunately, looking at these issues after you have sold is a bit too late.

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  CheapskateQueen on 17/01/2016 - 21:30

  +1

  well, good news is, is that depreciation on buildings is spread over 40 years, so it would've been finished by the time you bought.

  If you've done any major renovations/additions to the building in more recent times, then yes you could have claimed it, and it sucks that you didnt.

  Depreciation, on buildings, and capital assets (air con, carpet, etc) have to be claimed in each relevant income year. Unfortunately you can't just claim it lump sum in this year. You will have to go back and amend each of your returns. If there's a chunky amount of money, it may be worth doing it for a few years at least.

  As for not having a depreciation report, yes, the ATO generally requires one. Mostly though, this would be for the building/fixtures, because your average jack black can't do it. However, if you want to claim depreciation some some of the more simple stuff, so long as you have receipts and do the calculations correct, there's nothing stopping you from doing so. You need the invoice for the item, and the effective life (how many years the asset is expected to survive). the ato releases a ruling on the effective life of assets every year. you can then use the ATO calculator to work out depreciation. e.g. the easiest things that come to mind are air-con, maybe if you bought new blinds, or anything else relatively expensive that your purchased that would make it worthwhile for you to go back and amend returns.

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  [Deactivated] on 20/01/2016 - 15:02

  Hi Colin, you may be able to request an amendment to your tax. You could possibly do it online via the ATO website, however, a licensed tax agent/accountant would probably be your best source of reliable info on how far you can push the amendment given your specific circumstances.

  Speaking about claiming deductions for older properties in general, this article (https://www.naritas.com.au/articles/a-case-for-claiming-dedu…) may come in handy.

  Hope this helps.

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  megamilinda on 22/01/2016 - 16:28

  The depreciation can only be claimed against rental income for the year that it relates. Since you purchased it in 1990, there would be nothing left to claim since the house was built in the 1940's. You would also be out of time to amend so far back, so even if it was worth claiming, you can't.