Second new kitchen in IP in 6 years

Discussion in 'Accounting & Tax' started by Pking, 26th May, 2020.

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  1. Pking

    Pking New Member

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    HI all

    We installed a new kitchen in our IP around 6-7 years ago. We then moved in to the place for a couple of years in which it became our PPOR again, and have now moved out again a couple of years ago so it's back to IP. We had some issues with our kitchen and had to replace quite a few cabinets and the cooktop and oven along with some of the benchtops. If we claim depreciation on the new kitchen/work, is that likely to raise a red flag with the tax department, considering I guess we are still depreciating the one from 6-7 years ago? Is this a good idea or should we not claim the depreciation this time around? I don;'t really want to attract any extra attention, but given the situation do I have any reason not to?

    Thanks!
     
  2. Terry_w

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

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    You cannot claim depreciation on second hand items, other than building works.
     
  3. Pking

    Pking New Member

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    Not second hand items, all of the kitchen cabinets, benchtops and appliances are brand new, we;ve essentially installed a new kitchen for the second time in 6-7 years, hence my concern!
     
  4. Terry_w

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

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    if you installed them while living there they are not new at the point the property is rented.
     
  5. jaydee

    jaydee Well-Known Member

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    Wow, two kitchen refurbs in 7 years!

    None of the rental properties I own have had a kitchen refurb in 18 years (some new appliances, yes, but no refurb other than touch up). If it really needs it do it. There are no red flags from the ATO as long as the money is actually spent and invoices can be provided.

    You ask : "Is this a good idea?" Answer: "No!" but if it is necessary to be able to lease the property then blow your dough however you like.
     
  6. Terry_w

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

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    i should point out that part of a kitchen will be building works but part fixtures and fittings.

    A QS would be able to explain more than I
     
  7. Pking

    Pking New Member

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    Just to clarify, it was an IP when we installed the first kitchen. We then moved back in a couple of years after that and it became our PPOR for approx 2 years. We have since moved out again, about 2 years ago, and we installed the new kitchen about 9 months ago, when it was rented out. So it's all done already, and we were not living in the place either time.
     
  8. Terry_w

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

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    If you installed it while renting that is ok, you can claim depreciation on div43 and div40 items
     
  9. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    Dont forget the former kichen may also reflect as a deductible or non-deductible loss for the undeducted value at the time it was scrapped since its effective life has ended. All that and te new kitchenn could be advised and handled by a tax agent without a revised QS report
     
    craigc and BMT Tax Depreciation like this.