Is getting a depreciation schedule for a 100yo property worth it?

The QS was right in that the depreciation will be in the Assets as opposed to the building (unless there have been renovations).
As Terry said, if it was my block, I would want four separate Dep Schedules so that if you replace a hot water unit in one or renovate a bathroom in another it's easy to keep track of stuff.
A QS needs to work out the cost of the individual Assets in each flat, so it's not a big deal (and won't cost much) to do 4 Schedules.
Scott

 

Thank you so far for your responses. Very grateful, but I'm afraid I'm still a little confused as to the benefits of having 4 schedules done, and how it is easier to keep track. Sorry.
How is it different to viewing it being a 6 bedroom house with 4 bathrooms and 4 hot water systems, and keeping track of it that way?

What actually happens to the existing schedule if and when I do renovate a bathroom? Does the accountant compare costs to the schedule or do I have to alter the schedule?

 

A good QS will update the schedule for you at no charge a couple times at least.

 

A

Part of the reason 4 Schedules will be useful is if you toss out an Asset, carpet perhaps, that is not in the Low Value Pool. In that case, you can claim the disposal value of it. If there are Dep Schedules for each flat, your accountant will be unable to identify the Asset disposed of. If everything is on the one Schedule and there are 4 carpet items, it will be difficult to know which is where.

 

Depreciator is on the money here. You should always be prepared for every contingency and having one single report will see you up the creek if you decide to sell off one or more of the units. Trust me, it will cause headaches for your accountant if they have to try to extract assets from a master report. It might not be such an issue if the units were all on one title and you were never going to split them up (i.e., you could treat it more like a house) but it would still always be easier to keep them separate.

A depreciation schedule for a single dwelling can look pretty complex as it is. Now imagine one that has four times the assets in it!

If it's simple changes you can do things either way. However, if your renovation involves the removal of capital works eligible for scrapping then a QS will have to take care of that (because it will likely involve a degree of estimation). If the existing bathroom is an old one then there's probably not much to scrap in it (bathrooms are largely capital works with few plant items).

 

Capital allowances permit a holder to review the effective life of a depreciating asset if reasonable.

Buildings and fixtures that are not depreciating assets cannot be reset al law. They must use the original construction cost and start date.

However, the QS industry relies on an ATO administrative discretion to allow an estimate of construction cost and build date where it is impractical to obtain that information from the vendor. This is not law, in fact there is a legal requirement that the vendor provide these details but it is seldom enforced. This is not a restart, rather an attempt at 'reconstruction' of the original facts.

 

A lot of tax law is just administrative decisions that bind statutory law. ie Tax Rulings, Determination, Interpretive Decisions, Decision Impact Statements, PSLA....And sometimes with the Commissioners views on "reasonable" or even a discretion. eg Remission of interest. Often with Treasury and Government influence too.

I had a tragic tale with a SMSF beyond non-compliance (and a trustee who took their life). I sought guidance for the surviving spouse. An Asst Commissioner called me and told me to wind up the SMSF by withdrawing the money. No tax, no rollovers, no lump sums, not even a final return. He said it was no longer a SMSF and he had no jurisdiction over a former SMSF that was wound up with no assets - That was his opinion. I received a written opinion. No audit. NO SAF, No APRA. He said just do it - Fast. All I had to do was lodge a CU Update form and advise no assets. The TFN and ABN disappeared in a few days.

 

I got separate schedules on each of the units in my unit block. I figure that makes things a lot more straightforward when I strata title them and sell individually.

 

Again, thank you very much.
Great information here.

It's unlikely I'll be Strata dividing and selling them off individually. They are there for long term rental return.

It's great to hear from QS but would also love to hear an accountants thoughts on this question too if possible.

Thanks again.

 

I am interested with this one, so if the previous owner has fully depreciated the 100 yrs old property, someone else after purchasing can depreciate further, is that correct?

Would that also true so my depreciation schedule that I organised few years ago for my IP is about to finish, do I just order another from the surveyor (following the above logic?)

 

Not in light of the changes in the May federal budget. From now on, when you buy a second hand property, you can't claim depreciation on any Assets, just building. And with a 100 year old building, there is nothing left - unless there have been renovations.

Re: Your expired Dep Schedule. Just get onto whoever did it and ask them to extend it. I didn't think anybody did short ones these days.

Scott

 

What Scott said, but also this: previously the new owner wasn't depreciating assets "further", they were depreciating them again because their values reset upon purchase ...

... which means, following the above logic, that they wouldn't restart for you just because you got a new schedule, because you're not buying the property again.

 

Thanks ...what is the normal schedule? One I did previously was 10 years span. How many span of years do people get? I will definitely go back and ask them again.

 

There is no 'normal schedule'. Some run for 1 year, some for 5, 10, 20 and 40. Ours run for 20 years, but I reckon 10 is about right. Nobody is ever going to use a 20 year Dep Schedule without it needing to be updated. The most important thing is to go with a provider that will update your Schedule as often as need be - ideally without charging.