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Depreciation report worthwhile if demolishing a house

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

  1. eggnog

    eggnog Active Member

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    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.
     
    eggnog, 11th Jul, 2015
    #1
  2. HD_ACE

    HD_ACE Game-Changer Premium Member

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    Will you be renting it out before demo?
    Will you be building and renting out the development?
     
    HD_ACE, 11th Jul, 2015
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  3. Chilliblue

    Chilliblue Well-Known Member

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    If the property will produce some income before demolishing have a chat with a company or two about a scrapping schedule schedule.
     
    Chilliblue, 11th Jul, 2015
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  4. Depreciator

    Depreciator Moderator Staff Member

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    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
     
    Depreciator, 11th Jul, 2015
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  5. eggnog

    eggnog Active Member

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    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.
     
    eggnog, 11th Jul, 2015
    #5
  6. Depreciator

    Depreciator Moderator Staff Member

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    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.
     
    Depreciator, 11th Jul, 2015
    #6
  7. eggnog

    eggnog Active Member

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    Thanks depreciator. I had a similar thought so wanted to check with this board first. Will see what my accountant says.
     
    eggnog, 11th Jul, 2015
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  8. eggnog

    eggnog Active Member

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    And who knows, i might end up changing my mind and keep some of the lots.
     
    eggnog, 11th Jul, 2015
    #8