Join Australia's most dynamic and respected property investment community

Depreciation report worthwhile if demolishing a house

Discussion in 'Accounting & Tax' started by eggnog, 11th Jul, 2015.

  1. eggnog

    eggnog Active Member

    Joined:
    22nd Jun, 2015
    Posts:
    36
    Location:
    All over the place
    I recently bought a house and intend to demolish it within the year in order to do a 1 into 4 lot subdivision. Should I still get a depreciation report done? I won't be able to claim tax deductions on the holding costs as it is a development so I don't see the purpose of a depreciation report.
     
  2. HD_ACE

    HD_ACE Game-Changer Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    449
    Location:
    Perth
    Will you be renting it out before demo?
    Will you be building and renting out the development?
     
  3. Chilliblue

    Chilliblue Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    1,579
    Location:
    Australia
    If the property will produce some income before demolishing have a chat with a company or two about a scrapping schedule schedule.
     
  4. Depreciator

    Depreciator Moderator Staff Member

    Joined:
    15th Jun, 2015
    Posts:
    730
    Location:
    Sydney
    Yep, the key, as Chilliblie said, is to rent it out for a while. Then when you knock it down you can claim the residual value of the Assets and possibly any building works or renos - dependent on when the works were done.

    Scott
     
    willair likes this.
  5. eggnog

    eggnog Active Member

    Joined:
    22nd Jun, 2015
    Posts:
    36
    Location:
    All over the place
    Thanks all for the replies.

    I will be renting the property to the original owners at settlement while at the same time start the subdivision applications with council. I will be selling everything once subdivided.

    Also, not sure if relevant but property was purchased under a discretionary trust.

    Will have a chat with my accountant next week but would be great to also hear other peoples opinions prior to meeting them.
     
  6. Depreciator

    Depreciator Moderator Staff Member

    Joined:
    15th Jun, 2015
    Posts:
    730
    Location:
    Sydney
    You might be out of luck with claiming the stuff you toss out if you are planning to sell up when complete. Your accountant will advise.
     
  7. eggnog

    eggnog Active Member

    Joined:
    22nd Jun, 2015
    Posts:
    36
    Location:
    All over the place
    Thanks depreciator. I had a similar thought so wanted to check with this board first. Will see what my accountant says.
     
  8. eggnog

    eggnog Active Member

    Joined:
    22nd Jun, 2015
    Posts:
    36
    Location:
    All over the place
    And who knows, i might end up changing my mind and keep some of the lots.