Depreciation on a Neutral Geared Property

Hi all,

I've recently purchase my first investment property that would be 3 years old next year under a family trust and from my holding cost calculations it appear to be either neutral geared or very minimally negative geared.

With regards to building depreciation, would PCers be able to advise if there is any benefit/advantage to get a QS done and claim the depreciation?

Much appreciated,
Dex

 

Why wouldn't you want to claim money you are entitled to? You will get more than the cost of the report back in the first year.

Give Depreciator (from this forum) a ring Depreciation | Tax & Property Depreciation Schedule | Depreciator

 

Absolutely yes. It doesn't matter if your property is positively or negatively geared you should always get a depreciation report and claim it

 

Edit: ignore what I wrote - I read too quickly

 

The Depreciation on a 3yo property may very well turn it into a positive cash flow investment.

 

ATO expects you to claim depreciation and can treat you as if you claimed the depreciation you were entitled to even if you didn't claim it. Of course this isn't common but why take the risk?

 

@iDex, I cannot think of one reason why you shouldn't/wouldn't get yours done.

When I buy IPs, I book my QS prior to settlement, I have them onsite within a week of settlement (sometimes within a day or two) and I forward their depreciation schedule to my accountant within a month of settlement.

 

I think you might have mis-read the OP.

The IP is 3 years old but @iDex only bought it recently.

I assume this FY. If it was in FY16, then they can amend that tax return if they have already submitted it.

 

oops, I totally should learn to read - thanks for the heads up @kierank

 

Yes it bought from the previous owners who built the home this FY.

Is the depreciated loss claimed as an accumulated loss only when I sell the property or are there other ways to claim such losses?

I bought as a long term investment so if I could get it positively geared year on year that would be preferable!

 

You claim every year. You can have a flat rate or sliding scale. Most people go for the sliding as you get the most at the start. Depreciator or you accountant will advise on that. Just give the paperwork to your accountant.
As mentioned, it can turn a negative cashflow property into a + cashflow property.

 

Depreciation is claimed every year as a operational expense.

All you have to do to send the Depreciation Schedule to your accountant and they will do the rest.

 

Thanks everyone, time to give a QS a call to get the depreciation report done.

 

Well hell if it's almost brand new get a Schedule done asap. The good "juice" is within the first 10 years from new. Should fatten your tax return by a couple of thousand a year.

 

Even though the property sits in a trust if the property makes a loss the loss is trapped inside the trust for future use

 

Unless you plan to sell the property in a relatively short term and dont want to have the hassle of adding it back in capital deductions when calculating CGT, definitely get a DS and claim the depreciation. At 3yo you will have some good depreciation benefits