Depreciation of equipment / plants

So, I appreciate that since 2017 I can only depreciate new equipment assets, installed when I owned a property and it was producing income.

How does it work when one is transitioning a property from PPOR to IP? Do you need to wait for the property to be tenanted, or advertised - or simply vacated with the intent to rent it out?

Is is based on the purchase date of the asset, or the installation - e.g.if I buy a split system today, and get it installed when the property is advertised.

Thanks!

 

The 9 May 2017 law change impacts you. Used assets after 7:30pm on that date that have been used cease to be eligible for Div 40. Div 43 remains available. eg the HWS etc.

Also the non-deductible Div 40 cant still be used to reflect a CGT loss when a sale or asset scrapping occurs. So seek a QS opinion on a report and include the AC.
New assets that are not used assets commence Div 40 depreciation from the installed "for use" date. The installed cost is relevant. That data doesnt need to be when a tennat can use the asset. Its more about when the asset has been assigned for use to produce (future) income. This principle is governed by common (case) law.

If the AC is installed today and its still your home the depreciation may be lost. If its installed after you cease to occupy its fine provided your intention is to use the asset as a element of the rented property. The available for use date is the start date. This could be when you vacate, the agency date. Depends. If you vacate and "think" you migt sell then its not when you vacate. If you vacate and intend to rent and its being readied for rent ec then its likely setaside to produce income and available in your mind and the agency agreement merely support that view. Dont leave a big gap if possible.

 

Thanks Paul, this is really clear and helpful.

 

I agree with Paul here.

Basically if your (soon to be) PPOR plant and equipment is ‘other than brand new’ you can’t claim depreciation on it.

You can install brand new items (not gumtree specials) immediately prior to putting on the rental market - and have full entitlement to the deductions. Just don’t use them beforehand.

Cheers, Will