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Pre-Renovation & Post-Renovation Depreciation Schedules

Discussion in 'Accounting & Tax' started by Kai41314, 31st Aug, 2015.

  1. Kai41314

    Kai41314 Well-Known Member

    21st Jun, 2015

    I just bought an investment property and am planning to do renovation on it. I read from a website that to maximize the tax deduction, I should get a pre-renovation depreciation schedule. So I can avoid missing out on any valuable deductions before I throw away or demolish them. Then I should also get a depreciation schedule after renovations are done.

    Do I need to get both pre-renovation and post-renovation schedules from a quantity surveyor? Since I will know the cost of renovation, can my accountant handle the post-renovation schedule for me so I might only need to get a pre-renovation schedule from a quantity surveyor?
  2. Depreciator

    Depreciator Moderator Staff Member

    15th Jun, 2015
    You're going to need to rent the place out for a while before tossing stuff out if you want to claim the value of it. Are you planning to rent it out first?
    As a general rule, it's always best to get a Schedule before you do anything and use a firm that will update your Schedule free of charge when you renovate using your costs.
  3. BMT Tax Depreciation

    BMT Tax Depreciation Chris Business Member

    22nd Jun, 2015
    That's fairly spot-on, but as Depreciator asks: are you renting the property out (or is it at least available for income) prior to the renovation works? The ATO doesn't like it too much when people attempt to claim scrapping deductions if it's not in the middle of an income-producing period. Unfortunately (or perhaps fortunately, depending on your worldview), it is vague about what length of time is required.

    People always think they can save a buck by getting their accountant--a professional who doesn't specialise in depreciation--to do this work for them. For a full renovation this can be a lot of additional work for your accountant so don't make the assumption that this is somehow going to be cost-effective (or even accurate). It can be even trickier if the pre-renovation report contains capital works that have been disposed of, meaning that the scrapping deduction for them might need to be apportioned out a total value.
  4. Definitely not a case of claiming scrapping when its an initial reno - Scrapping only applies to long ter rental with a reno in the middle. When clients do major reno's it is definitely worth having the QS do a final report. They know what to maximise. The sole thing I do without a QS report is when you add a new item like a new oven, AC etc.