Depreciation - PPOR now IP

Hey everyone,

Hoping someone can help me out with a question as I seem to be getting conflicting advice online and when talking to QS folk.

I have a PPOR purchased 10+yrs ago and am looking to convert to an IP. There's quite a few new items that I have installed in the last few years (e.g. Oven, Stove, Dishwasher, Aircon) and then some items brand new just before I am about to lease (e.g. re-paint & carpet - unused).

Can someone let me know are the new depreciation rules that came into effect in July are applicable to me or am I grandfathered given this is an existing property I own prior to May 2017? Should I be able to get a schedule drawn up with all my "previously used" plant & equipment included?

Thanks heaps!!

 

Yes they apply to you. These items would be used items and could not be claimed against income.

 

The revised rules commenced from 9th May 2017 and means :

- If the property was not tenanted in the period between 9th May and 30 June 2017 then all Depreciation (Div 40) ends
- The amount you can no longer deduct is eligible for a CGT loss when the item is scrapped (if it can be identified so the termination value can be determined) or the property sold

From the time to property becomes a IP only new items acquired during that time can commence depreciation. An accountant can add a schedule to the tax return if required.

If you dont have a QS report there would be be value in obtaining one for two reasons :
1. The CGT scrapping issues and
2. Div 43 capital allowances

The repaint is not deductible (or relevant for depreciation) as it occurred prior to tenancy.
The carpet installed may be depreciable.

Cost incurred to reno eg paint etc will add to the CGT costbase which may also be impacted by the "special rule" for a former home that commences to produce income for the first time. However if the value incorporates those costs you should not add them in