Capital Works deduction on old houses

Hi there,
I was reading ATO Tax guidelines on rental properties and they have not mentioned anything about the houses which were constructed more than 40 years ago i.e. before 1978

Some questions on this aspect
1. Is there any way that we can still claim the 2.5% CW depreciation for old properties?
2. If yes, how do we workout approx. how much will be claimable e.g. a house in Elizabeth, SA built in 1964 which is selling for 300K - land size of 800 sq.m.

Cheers

 

1. yes, if new capital works have happened.
2. get a QS to estimate

 

Thanks Terry.

#1. From capital works, I was more referring to the original construction costs of the house e.g. if construction happened in 1960s. Can those be claimed anyway for such older houses?
#2. I understand that QS will give you proper estimate but while I am researching / weighing up on various potential IPs. Is there a general formula to ballpark the amount that can be claimed.

My intention here is to buy an IP that gives me maximum tax deductions.

 

1. no - only for construction after about 1987
2. not really as it would vary too much.

 

Buy something post-87. There'll be little left if no work has been completed on a 30 year old building.

 

Yep. Either post Sept 87 original construction, or an old place with substantial post 87 renos.

I have never thought depreciation should be a significant factor in a purchase decision. It's just something that helps defray holding costs.

Scott

 

Presuming that construction cost of a typical 90s era suburban house is 200K and 2.5% of that is 5K.

Say if I buy an 80s house and hold it for 10 years, I lose that 50K worth of deductions (over 10 years period).

If I buy a house built in 1992, then I can claim it for next 10 years.

I am at the highest marginal tax rate (i.e. 47 pc). I am assuming most of you are as well.

So over 10 years I will lose 23.5K (47pc of 50K), so this deduction is quite significant factor in buying a house, unless I'm missing something.

 

Construction cost (in 1992) not replacement value in today's $. Back then, it may have cost $50k to build, so is 2.5% of $50k a deal breaker?

 

A 1990s home with some kitchen and bathroom or external mods may well be 2.5% x $100K.

$2500 a year for even 10 years as a deduction cant be sneezed at. Esp when it cost $550-$800 for a report as a one off deductible cost.

My view is its always better to have a QS tell you its not worth getting a QS report than to find out later you missed a tax benefit. Dont assume there is no benefit in a QS report.

I had a client buy a old early 1930s city unit. Externally it looked real old. Inside and out had full heritage restoration (art deco) and new roof, windows and fire systems and external rear fire stairs, lifts, rewired etc. Their share of common area was worth it. Their unit had next to no depreciation as it looked classic and untouched. They had 8% of common area worth $4K a year in deductions.

Much like the new property coming up on the new series of The Block.