Depreciation-when does it start?

Two scenarios..

First - investment in property

Contract date 1 jan 2018
Settlement date 1 feb 2018
Tenanted from 15 feb 2018


Second - ppor to ip

Moved out on 1 jan 2018
Available for rent from 2 jan 2018
Tenanted from 15 jan 2018

For both cases when does the depreciation start from???

 

From personal experience, my understanding is that depreciation starts from the date the property becomes "first available to let". Of course, one can only start claiming depreciation once ownership is taken over (ie: no earlier than settlement date).

First example - Should be settlement date. Even though property was untenanted until 15 Feb, the property was still subject to wear and tear whilst being advertised for rent. However, if renovation was conducted upon settlement that may shift the "first available to let" date.

Second example: 2nd Jan 2018

 

When the property was first used. ie first date of tenancy. The rules for depreciation and those of general property deductions differ. This is borne out with the recent changes which can also deny depreciation (Div 40) deductions in some cases. eg If you use the property prior to tenants

The QS will ask these questions

 

Good Morning,

The building will start depreciating from when construction was completed, and is claimable if it was built after 1987.

The fixtures and fittings start depreciating from when you settle on the property, however are not claimable until the date the property is available for income.

I will mention however that there has been legislation passed towards the end of last year that will effect the ability of some investors to claim depreciation on the fixtures and fittings.
These include;

* Those who exchanged contracts on second hand property after 9th May 2017.
* A property used as a principle place of residence before being made available for income after July 1st 2017 onward.

Brand new properties that are rented from settlement are not effected, as well as commercial & industrial properties.

Also, despite these new changes the capital works is still claimable for any property built 1987.

 

Which is why I rely on the QS. They are experts in their own field. I like the mention of Div 43 which yes...has its own rule.

The building will start depreciating from when construction was completed, and is claimable if it was built after 1987.

 

thank you all for the useful information. Much appreciated!