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Depreciation schedule and pro rata

Discussion in 'Accounting & Tax' started by JohnPropChat, 22nd Sep, 2015.

  1. JohnPropChat

    JohnPropChat Well-Known Member

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    If I get a depreciation schedule but sell my property before the end of financial year. Do I just pro rata the depreciation for the time it was an IP(It was a PPOR until a few weeks ago)?

    Does it matter if I get a depreciation schedule just before end of financial year?
     
  2. BMT Tax Depreciation

    BMT Tax Depreciation Chris Business Member

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    That's correct.

    Conversely, if you purchase your property some way into the financial year then we do that part of the pro rata for you (not relevant in this case but perhaps handy to keep in mind for the future).

    The only real difference is that you're setting yourself up for a longer turnaround. Everybody seems to think the best time to order a schedule is halfway through June. If you pay before 30/6 then you'll get to claim the fee in that year.
     
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  3. JohnPropChat

    JohnPropChat Well-Known Member

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    I see, so the depreciation is only effective after a schedule has been done. Makes sense. I did remember reading somewhere that any unclaimed depreciations for the past 4 years can still be claimed but I suppose that only works for things that have receipts.
     
  4. Depreciator

    Depreciator Moderator Staff Member

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    No, depreciation is claimable from when the property is available to rent. The point Chris was making is that ordering a Dep Schedule at the busiest time of year means it's going to take longer to get it because we're all so busy.

    Scott
     
  5. BMT Tax Depreciation

    BMT Tax Depreciation Chris Business Member

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    Yep, thanks, Scott.

    Sorry if I was unclear, John. Scott is correct there.

    To my knowledge you can only amend the previous two submitted tax returns but some in this forum claim that it's easy to get special consideration for longer.
     
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  6. JohnPropChat

    JohnPropChat Well-Known Member

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    A question here: My property was an IP when I first bought it, then became a PPOR(for 2+ years) and now is an IP again. So if I get a dep schedule now, will the "first year depreciation" claim correspond to when it was a IP 2 years ago or this financial year?
     
  7. JohnPropChat

    JohnPropChat Well-Known Member

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    A tax question: If one gets a depreciation schedule when a property goes under offer, can one still claim depreciation for that financial year?
     
  8. BMT Tax Depreciation

    BMT Tax Depreciation Chris Business Member

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    If you can amend that far back, then your first year is when you were first renting it out. Your provider may be able to defer deductions as much as possible (but certainly not completely) until your current rental period.

    Depreciation claims are possible at the earliest from the settlement date or handover date. So, you wouldn't be able to complete a schedule without one of those being known. However, you would be able to claim the fee for the report in whichever year it's paid.
     
  9. JohnPropChat

    JohnPropChat Well-Known Member

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    If I don't want to amend, is that a good enough reason to just start from the current rental period?

    Sorry, I meant when I sell my property. My IP is currently on the market but I am not in a hurry to sell so it could sell in 2 months or 2 years. So, not sure if I should get a depreciation schedule as if it sells too soon then it would be a waste of money but if I am allowed to get a schedule when my property sells(goes under offer) then that would be the ideal case and I can amend tax returns (if necessary).
     
  10. BMT Tax Depreciation

    BMT Tax Depreciation Chris Business Member

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    You don't really need a reason, though I'd be balancing effort vs financial benefit! If you choose to do this (for whatever reason) I suggest you ask the provider to defer the low value pooling until the property is available for income for the second time. That will give you the choice of the best possible deductions, whether it's the diminishing value method or the prime cost method that you choose. Your accountant will help you with this.

    It depends how far in the future it is. If it's only two years then that's fine, but not if it's much longer (otherwise your ability to amend may be limited). Don't forget that for a proper depreciation schedule to be compiled, full access to the property will be required. Leaving things till the last minute can cause complications.
     
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