Depreciation schedule for short term IP?

This could be a silly question, but we have just purchased a property that is currently tenanted and will remain that way for 10 months after settlement, at which point we plan for it to become our PPOR.

The property was built in 2004. Is there value in getting a depreciation schedule for what will only be an IP for approx 7 months of this financial year? If yes, is this something worth asking the vendor if they have one, and if so, can I use that or do I need to get a new one drawn up?

Thanks in advance.

 

7 months of building works potentially. But the QS report might cost more than the savings.

 

Without knowing anything about the property, you could expect $3k-$5k for a year on most 2004 builds if previous owners have not made any updates. In some scenarios, it could still be worth it but it would depend on a.) the property in question, and b.) your tax/income position.

Worst case scenario for deductions is probably still 5/6 (10 months) x $3000.

 

If you don't ask you don't get or find out the facts and yes, I believe you can use a schedule paid for by someone else.

 

Yes. And for newer apartmnets lots the buikder often has QS preliminaries already done and its not that hard to have a schedule completed. Usually with fitout details as the buikder estimates are for the main construct and not to the details of specific fitout and appliances

 

I agree with Chris from BMT here.

Assuming it’s a typical slab on ground house around 200sqm at $1,100/sqm to build - you are looking at around $220,000 in claimable Capital Works items.

Claimable at 2.5% that’s around $5,500/yr in tax deductions.
Divide by 12 and times by 7-months and that’s around $3,200 in tax deductions for you.

Now your QS report will cost somewhere between $500-$700.

Note: that QS fee is also at tax deduction - just like your accountant’s fee is.

These are just round figures but hope that helps.

 

Thanks, appreciate the responses. The existing owners are happy to provide their existing depreciation schedule so that's a plus!

 

DONT claim their division 40 plant & equipment amounts as they wont now be eligible for a new owner.

 

Like Paul said - don't claim for the plant & equipment.
Also, you/your accountant will have to pro-rata the 1st financial years deductions.

If it's available for rent from 1 January 2021 then that's 181/365

 

Many reports will pro-rata for you based on the days available advised to the QS so dont leap in and pro-rata without reading a report. When you are using someone elses report yes that is usually necessary however for the Div 43 cap allowances.. That said... The non-deductible element of the Div 40 for the periof of time you are its owner is still useful sometimes as later when you sell you can use the "lost" deduction for a CGT loss amount.

 

I agree with both Chris and Will here. Their preliminary quotes would also be just for the original construction of the building too. When a QS assesses for eligible depreciation, the report will also take into account any capital improvements completed by any previous owners. You would be eligible to claim any residual values on those eligible improvements. I would highly suggest you organise your own schedule with your own details on the report instead of using the previous owners report that would reflect their information.