Tax Depreciation on Older Properties
“What Depreciation is there on older properties?”
Just because a property is older than 1985, it does not mean there is no depreciation left to claim.
When you purchase an Investment Property, old or new, the plant and articles depreciate from the date of ownership. When a Quantity Surveyor carries out an inspection they will value the plant and articles within the property.
These consist of items like:
- Carpet
- Blinds
- Oven/cooktop/rangehood
- Dishwasher
- Vinyl
- Exhaust fans
- Ceiling fans
- A/C’s
- Hot water system etc.
Every property whether old or new will have some or most of these items, that are generally depreciated over 5 years and NOT added back to your cost base when you sell. So any depreciation from plant and articles does not have to be paid back when you sell.
Also with older properties any renovations carried out to the property can be depreciated over 40 years. Common renovations in older properties are:
- Re-painting
- Floors sanded and polished
- New kitchen
- New bathroom
- New electrical work
- New fencing
- New pergola etc.
A recent Tax Depreciation Schedule that I prepared on an older property had over $150,000 in renovations and the depreciation that the owner received was more than what some newer properties were entitled to.
There are always items to depreciate in older properties and if you use an experienced Quantity Surveyor they should be able to identify any renovations and also estimate approximately when they were carried out. These renovations will depreciate over 40 years as standard Capital Allowances.
Whoever you use to carry out your Depreciation Schedule make sure they offer ‘the guarantee that you will get double your fee in depreciation in your first full year or the report is free’.
Hope this helps.
Happy Investing!
Filed Under: Property Investment • Renovations • Tax Tips
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