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When is the house considered build ?

Discussion in 'Accounting & Tax' started by bhojapudur, 31st Jul, 2016.

  1. bhojapudur

    bhojapudur Member

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    I'm planning to make my PPOR to IP which was recently build and hence the below query.

    I had build the house using a project builder, who handed over house in Nov 2014 . I had interim occupation cert from builder to move in. We moved in on Dec 2014.
    We have completed all the required DA and got the Full occupation cert on Apr 2016.

    So for the Tax purpose when is the house considered fully build 2014 or 2016?.
     
  2. Marg4000

    Marg4000 Well-Known Member

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    How could you live there for 16 months if the house was not built?
    Marg
     
  3. bhojapudur

    bhojapudur Member

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    House was handed over in Nov 2014 with interim occupation cert and we got the final OC on Apr 2016.
     
  4. Daniel Taborsky

    Daniel Taborsky Well-Known Member Premium Member

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    Why does it matter? What are you trying to work out?
     
  5. bhojapudur

    bhojapudur Member

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    Depreciation of course. It looks like depreciation ladder looks very steep for first few years. Researching if its still worth to make PPOR to IP.
     
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  6. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    If it was the main residence then no depreciation during this time anyway. if later rented out this would change things.

    I would think it would be the date of the interim OC - but may be wrong.

    @Depreciator would know.
     
  7. Depreciator

    Depreciator Moderator Staff Member

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    Thanks Terry.
    The date construction commenced is the relevant one for determining what rates are used for the building.
    If you decide to rent the house out, you will start claiming depreciation from when the property is 'available to let' - that could be when you hand it over to an agent to start advertising for tenants.
    You have only owned it for a couple of years, so you have not lost much depreciation.
     
  8. bhojapudur

    bhojapudur Member

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    @Depreciator
    Thanks for reply. House construction started at July 2014. and final Occupation cert at Apr 2016.
    So lets says i let it out this month ( Aug 2016). So my year 1 starts with Aug 2016 right or would it be deemed as year 3 ?.

    Sample for 60 Sqm Granny flat using your BMTQS calculator.

    Year 2016 :

    Maximum
    Year Plant & Equipment Capital Works Total
    1 $5,600 $1,500 $7,100

    Year 2014:
    Maximum
    Year Plant & Equipment Capital Works Total
    1 $5,400 $1,500 $6,900

    I understand that they are not big, but would be substainal if you consider a 220 Sqm property.
     
  9. Depreciator

    Depreciator Moderator Staff Member

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    Hey bhojapudur, my company is not called BMT.
    We are Depreciator.
    Free calculators that ask very few questions are useful as a rough guide only. I also include our calculator when I say that.
    Your depreciation Schedule will start when you move out i.e. 2016. The Assets would be treated as new.
     
  10. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Scott - when does the life of applicances begin for claims?
    e.g. a new hotwater system - is it the date of installation, the date the property is first available for rent (I think this one) or when occupancying certificate is given?

    Thanks
     
  11. Depreciator

    Depreciator Moderator Staff Member

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    Yep, that one.
    The OC is rarely of much use because sometimes people get it years after a property has been completed.
    If an appliance has only been in place for a year or two, it would be treated as a new item.
     
  12. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Thanks Scott
     
  13. bhojapudur

    bhojapudur Member

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    Thanks for clearing up Scott.
     
  14. Daniel Taborsky

    Daniel Taborsky Well-Known Member Premium Member

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    I always thought that an appliance needed to be depreciated from when it is first used or installed ready for use: s 40-60 ITAA 1997.

    If the appliance was initially used for personal purposes then this depreciation is lost forever (i.e. the asset depreciates but the depreciation is not deductible). This is a good example of where the prime cost method may be more beneficial than the diminishing value method (as you want to keep as much depreciation for the later years as possible).
     
  15. Depreciator

    Depreciator Moderator Staff Member

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    Yep. An Asset starts losing value from when someone buys it. If it is used for personal purposes, it loses some value and we come up with an opening written-down value as of when it becomes an income producing Asset. But if it's only a year or so, it's incidental. If somebody buys/builds a property and lives there for some years before renting it out, the Assets in the property will have lost a big chunk of their value. Sometimes they are worth nothing when the property starts being rented out.
     
  16. bhojapudur

    bhojapudur Member

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    @Depreciator, Can you please pass your contact details for a report. Thanks.
     
  17. York

    York Finance Broker Business Member

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    Contact Us
     
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  18. Depreciator

    Depreciator Moderator Staff Member

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    Thanks York.

    Bhojapudur, I'm not in the office till mid morning today, but the gang will all be there from 9am - they'd better be. The office number is 1300 660033. My email address is scott@depreciator.com.au
     
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