Year of construction - depreciation

What does it matter what year the property began construction from a depreciation report point of view? Where can I find this out, doesn't seem to be in the contract.

 

Deductions for construction expenditure (capital works deductions) on residential rental properties are generally spread over a period of 40 years.

You can claim a deduction if construction began after:

• 17 July 1985 and the property is used for residential accommodation or to produce income
• 19 July 1982 and the property is not used for residential accommodation (for example, a shop), or
• 21 August 1979, the property is used to provide short-term accommodation for travellers and it meets certain other criteria.

A deduction may also be available for structural improvements made to parts of the property other than the building if work began after 26 February 1992. Examples include sealed driveways, fences and retaining walls.

The deduction is at the rate of 2.5% or 4% (adjusted for part-year claims) depending on the date the capital works began. Your total capital works deductions can't exceed the construction expenditure. No deduction is available until construction is complete.

Deductions for construction expenditure apply to capital works such as:

• a building or an extension – for example, adding a room, garage, patio or pergola
• alterations – such as removing or adding an internal wall
• structural improvements – such as adding a gazebo, carport, sealed driveway, retaining wall or fence.

You can only claim deductions for the period in which the property is rented or is available for rent.

If you have claimed, or could have claimed, a capital works deduction for construction expenditure:

• you can't claim the same amount as a deduction for decline in value of a depreciating asset, and
• the amount must be excluded from the cost base of the asset.

Claim is based on original construction cost (A QS can help you work out the estimated cost) and 40 yers kicks in from date of original construction. Do a search on the Council records and see when the plumbing works were installed and this will give you a guide as to the original date.

Following ATO link might help:

https://www.ato.gov.au/uploadedFiles/Content/MEI/downloads/Rental-properties-2016.pdf

 

Because its 2.5% a year for 40 years for the building components. So you need to know how many years are left.

Additional to that , a good quantity surveyor like @Depreciator 's mob will use that year to understand the construction processes used and the products used when estimating item values.

 

Thanks. so where so I find out the year of construction?

And say if construction started end of the year, you won't get a full year worth back?

 

I'm confused, is it 1985 or 40 years? My investment was built in 1980 and I have never claimed any depreciation as I thought it was too old.

 

leave it to a quantity surveryor

 

Depreciation started in 1985 (it came in as a result of the government stuffing up negative gearing), so 40 years from then.

 

So I can potentially do a tax amendment for the past two years I haven't claimed and claim 2.5% of the build cost and continue to claim depreciation for another 8 years? (Sorry not sure why this is so hard for me to get my head around)

 

No, its from 85 only.

But, that's only the building itself. Stuff in it like the kitchen, aircond etc been updated? They might have some depreciation value still.

 

This question is asked in a PAYG Variation and is a silly question IMO since it doesnt get asked elsewhere. The date can generally found in a QS report or inferred from the report. In othercases ...um,,,err....just make it up....Take the end date of the Div 43 in the QS report and deduct 40 years. And if you dont have a QS report its probbaly a issue of minor concern....eg built in 1980 and no renos then answer 1980. And dont enter values for Depreciation and Capital Allowance deductions other than say from an accountants depreciation schedule from the prior years tax.

A building constructed in 1901 can have Div 43 deductions. Sometimes really extensive deductions. If its renovated or extensively rebuilt etc Focusing on 1985 is a red herring