New depreciation report after a renovation

Discussion in 'Accounting & Tax' started by splatters, 3rd Sep, 2017.

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  1. splatters

    splatters Well-Known Member

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    Hi Team
    Do you recommend a new depreciation report be done after a significant renovation? I had one done 12 months ago when my 1950s unit was in nearly original condition. I have spent $30k on kitchen, knocking down walls, ripping up flooring to polish original oak floorboards, painted throughout and furnished it for a holiday rental. I obviously now have a large list of new items that are depreciable, so will an accountant need a new report or can they depreciate based on the purchase costs of these items?

    Many thanks
     
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Purchase costs are known so you don't need a report. You could get the existing report updated.
     
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  3. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    Depending on the renovation, it might be well worthwhile. We once did a renovation where we did a lot of the work ourselves. The report assumed general costs for the renovation including labor. The tax refunds due to the depreciation report paid for the renovations (over the next 3 years).
     
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  4. splatters

    splatters Well-Known Member

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    thanks terry, i'll see if BMT will do a simple report update
     
  5. splatters

    splatters Well-Known Member

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    we did a lot of the work ourselves actually. i might call BMT and see what they advise.
     
  6. SimonQld

    SimonQld Well-Known Member

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    You can only depreciate the "cost to the taxpayer"
    In other words, you would require an invoice for your labour in order to claim depreciation otherwise you are looking to profit from the taxman by claiming depreciation for works that has not cost you anything (other than your own time). That said, not all QSs seem to share or acknowledge this part of the Legislation, so you could always find one who's prepared to value up based on the works completed however, if audited, you could be asked to produce the invoices for all works completed and if you have over-claimed based on your actual costs, well...
     
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  7. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Good point. I have also seen examples of people not explaining who did the work and its truthful cost. I had one recent example - He explained the QS report had been updated for the kitchen replacement. Then disclosed - That he and family did...Cost seemed high and he admitted he got quotes then they did a flatpack and told the QS the cost was that in the quote. I referred him back to the QS as its doesnt comply.
     
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