Alternative to depreciation schedule?

Discussion in 'Accounting & Tax' started by Thread, 30th Mar, 2016.

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  1. Thread

    Thread Member

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    I'm just about to start renting out what is currently my PPOR (1967 built house) in NSW.

    I understand having a depreciation schedule should give me a big tax benefit - but I'm not clear on the downsides of having this schedule done? If I choose to go this route, does it mean I'm not able to write off future repair/ maintenance costs that I could do otherwise?

    Are there any negatives to having this schedule done?
     
  2. Xenia

    Xenia Best Adelaide Property Manager Business Member

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    apart from paying for a report where there are no benefits claimable, ie old house, I can't see any negatives to a depreciation schedule.
     
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  3. datto

    datto Well-Known Member

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    You'll still be able to claim future repairs and write offs..that's what this game is all about. As long as you rent the place out of course.
     
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  4. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Member

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    A QS will be the best adviser.
     
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  5. D.T.

    D.T. Specialist Property Manager Business Member

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    No downsides, Thread. Repair and maintenance write offs in the future don't change.

    You get a nice discount on the schedule for pre 1985 houses too (my clients get a discount with Depreciator too) because there's less to find, but there's still enough to make it worthwhile.
     
  6. BMT Tax Depreciation

    BMT Tax Depreciation Chris Business Member

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    No, not at all. Those claims are entirely different to depreciation claims.

    No reputable provider would allow a client to go through with the schedule if this were to be the case.
     
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  7. bread_boy

    bread_boy Well-Known Member

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    Is it worth getting a surveyor out to site for a house built pre 1985?
    e.g. ex-housing commission house in original condition built in 1980.
    I understand the QS would prefer to do a photo/no inspection report as the margins are higher but is there any real advantage to getting a someone to attend site for such an old building?
     
  8. BMT Tax Depreciation

    BMT Tax Depreciation Chris Business Member

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    Yes, but other factors are at play. When did you buy it?

    That must depend on the provider. We would never provide a schedule for an older property without having inspected it.

    You would be surprised at the value that might be hidden there. Talk to a QS, give them the address and they'll give you a preliminary estimate before you proceed.

    You will get what you pay for. Doing a DIY/no inspection job on an older property is going to result in missed and undervalued items.
     
  9. bread_boy

    bread_boy Well-Known Member

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    Just settled last month.
     
  10. BMT Tax Depreciation

    BMT Tax Depreciation Chris Business Member

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    Then yes, absolutely. Whichever way you go about it, don't put depreciation in the too-hard basket. That old house may have a first-year claim of between $2000 and $6000, depending on its size, fit-out and level of renovation. If you private message me the address I could tell you what sort of ballpark you can expect.
     
  11. melbournian

    melbournian Well-Known Member

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    no issue if it is renovated or improved got one QS report and is fully ATO compliant - the first year is nearly 17K.
     
  12. Phase2

    Phase2 Well-Known Member

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    No downsides, but be aware if you sell after your 6-year grace period for CGT (for PPOR), the Gain is calculated based on the (final sale price - buying and selling expenses - purchase price - cost of capital improvements + accumulated depreciation). The accumulated depreciation is calculated whether you claim it or not... so you're better off claiming.
     
  13. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Member

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    Yes but if you sell after 6 years there are other factors that will affect the CGT calculation. eg the cost base will NOT be based on the acquisition cost as suggested. The CGT costbase will be the market value when the property first produces income (s118-192) and then the profit calculated may be apportioned into two periods (exempt up to 6 years) and the balance taxable...with a 50% discount.

    I do agree that all taxpayers are better off claiming today A dollar today is always better than a dollar (or 50cents in dollar based on a discounted cap gain) in 6+ years.