Depreciation methodology

Hi
1. Just wanted to know if I can choose different depreciation methodology on two different properties. Ie property A prime cost on old build, and property B an off the plan recently purchased using demonising value)

2. If a property is co-owned (2 names on title) can different depreciation methodologies be used by the owners

3. If my partner has a property (in their name only) and has used diminishing value; I have a property (my name only) and I used prime cost; and we then purchased a property together (new build off the plan) what depreciation methodology can each of Us use for the third property

 

That sounds like a hellish problem to have, I'd call an exorcist to get rid of the demons.

As for the 3rd property, AFAIK you must both use the same methodology ie: you can't both depreciate the same asset at different rates because it is the one asset.

 

1. Just wanted to know if I can choose different depreciation methodology on two different properties. Ie property A prime cost on old build, and property B an off the plan recently purchased using demonising value) - Yes. Two different properties can have two different formulas used.

2. If a property is co-owned (2 names on title) can different depreciation methodologies be used by the owners. - Both owners will have to use same formula.

3. If my partner has a property (in their name only) and has used diminishing value; I have a property (my name only) and I used prime cost; and we then purchased a property together (new build off the plan) what depreciation methodology can each of Us use for the third property - You can use either prime cost or diminishing method. However, both parties have to use the same method ...


Cheers,

 

Yes each property can have a different method and for each owner too !! However you cannot change methods once adopted. Each owner can have a different schedule and use a different method if they like for their interest but they do need to be done at the same time showing in each report a 50% interest for example - BUT this has the effect of increasing deductions and acts contrary to the PC method and accelerates write off so is akin to the Dim Val Mtd. The use by two spouses of different methods seems very unorthodox and complex and will do your head in in time and overall equate to very little or no marginal benefit. eg Pay rises, kids etc could outpace the apparent future deduction benefit.

Its often a question asked due to spouses etc having different incomes or a non working spouse. It often highlights issues with poor choice in structure too. eg You have a property in 50/50 ownership but as your wife isnt working now you want to delay deductions. The concern isnt the QS report its the structure and choice of 50% perhaps. If each spouse financed their respective shares differently it could achieve a better outcome eg Dad borrows 100% and Mum borrows 50% and uses cash for the other 50%.

Also the changed rules for depreciation deductions mean you cannot commence using a new schedule for a old build now and you also cannot change methods for the existing reports. Only a choice may be available for the new build.

Im not a fan of the PC method since it delays QS deductions and ONLY the Div 40 element which is a short duration AND also comprises a small part of overall deductions eg 20%. It has a marginal lesser deduction in years 1-4 and then there is little to none for years 5-7 and then very minor extra deductions in years 8-9 and then Changes to the rules could see the "gap"between one method and the other lost or later affected. And its not truly significant. I believe in the basis of claiming as much as you can today as it may not be available tomorrow.