Can't claim depreciation but what about capital works?

Hi,
Confused. I just brought a house that was built in 2009. I know I cannot claim depreciation, can I still claim capital works over 32yrs? Can't seem to find the answer. I got few houses in the past before the changes occur. thanks

 

yes

 

So do I still get depreciation report to estimate the capital cost? Surely the report will be cheaper?

 

How else could you estimate it?

 

if the vendor had contract as they brought land and built new...i have asked if they still got contract. if not then pay report

 

There are three elements you can claim

1. Div 43 capital allowances based on a construction estimate. Likely a QS report is needed. The former owners contract would be a useless basis and insufficient.
2. Div 40 for assets you add after acquisition ; and
3. A CGT loss for any items of plant and equipment which you dispose or or scrap during your ownership period.

The QS can address 1 and 3 and despite some reduction in your tax benefit it may not eliminate the benefits - Just changes their value and timing. It is still worth seeking !!

Speak to a reputable QS tax report firm like Depreciator, Washington Brown or BMT

 

Even if you were to obtain the original construction cost from the previous owner you still need this to be split into Division 43 depreciation, assets (not depreciable anymore but need to be valued for CGT purposes) and non-depreciable items (site prep and soft landscaping). There are also other considerations like builder's profit (not depreciable) and builder's preliminaries, consultants fees and council fees which are apportioned across all depreciable and non-depreciable items. Hence, even with the original construction cost, there is still work to be done and expert knowledge of construction costs required i.e. from a QS.
As for "surely the report will be cheaper", well, that is up to the QS however I will say this...the changes that came in this year are quite complex and I know from experience that I have probably spent hundreds of hours reading material, re-writing templates/programs, educating myself and staff, etc. On top of that the QS report still has to obtain values for all the abovementioned items so there are no real shortcuts / time-savings and, when you take into account the complexities and re-education, QS reports on existing properties are likely to cost more than they did 12 months ago rather than less.

 

Our perspective is the same as Simon's. Unfortunately, the assumption that there's less work for us to do now is incorrect. It's just a shame that we have to do at least as much work for less benefit.

Simon's comments on talking to the vendor are also correct. It is unlikely that you'll be able to find a substitute for a depreciation schedule this way.

 

Oh I don't know...I'd probably get the building contract and give it to the QS. The conservative values, if any, apportioned to the plant and equipment would justify the QS putting as much on the Div 43 which is all you can claim anyway!

#Justsaying

 

Are you able to buy the existing fittings separately then depreciate them? I.e. instead of buying a house for 500k, you buy the house for 470k and all the fittings for 30k in a separate itemised contract? I thought I heard this was a strategy...

 

Unfortunately not. The Government has used the term "Previously Used" to stop this occurring. So even if you separate the assets from the contract - if those assets have been previously used you still can't depreciate them in a residential transaction.

They closed this loophole concept pretty quickly.

So even if the oven you buy off Gumtree is 1 week old sold you can't claim the depreciation anymore.

Regards

Tyron