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Rental properties – claiming capital works deductions

Discussion in 'Accounting & Tax' started by JMica, 22nd Jun, 2015.

  1. JMica

    JMica Well-Known Member

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    20th Jun, 2015
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    Sydney
    Hi all,
    With the end of financial year quickly looming, I am trying to get my head around what I can and can't claim with the recent build of a Granny flat on my IP.
    I note that the ATO states that capital works deductions are the following expenses you pay for which you can claim an income tax deduction:
    • building construction costs
    • the cost of altering a building
    • the cost of capital improvements to the surrounding property.
    Is the above different for a GF?
    Can someone help spell it out for me :) ??
     
  2. Depreciator

    Depreciator Moderator Staff Member

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    Sydney
    A GF is no different from a new house or a major reno or anything like that.

    Cap Works refers to the building itself i.e. the structural component. That depreciate at 2.5%. Then there are the Assets that depreciate more quickly. These typically include appliances, floor coverings. HWS, air con etc.

    Scott
     
  3. JMica

    JMica Well-Known Member

    Joined:
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    Location:
    Sydney
    Thanks Scott, so I can just claim the depreciation on the building once it's leased out?

    As for the cost of building the GF obviously that amount is not tax deductible but would be the amount I can use to add to the cost base in terms of calculating CGT, when it comes to selling...
     
  4. Depreciator

    Depreciator Moderator Staff Member

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    You claim depreciation from when the property is 'available to be rented'. In the case of a new build, this is likely to be handover date.
    So you claim the structural stuff i.e. the building itself, on the GF at 2.5%pa. And you claim the Assets more quickly.
    Typically, granny flats have $4,000 - 6,000 per year in depreciation. It all depends on the cost.
     
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