澳洲Australia property Depreciation - plant and equipment | Sydn

在澳大利亚


Hi all,

I recently settled on my first IP - an old house in Pinjarra (circa 1945).

I've been doing quite a bit of research on the tax treatment of various aspects of the property - but one thing I am still stuck on is depreciation.

As I understand it, I can't depreciate the building as it was built before 1985.

I can however, depreciate plant and equipment. But I am not 100% sure how this works. It doesn't appear like I need to get a depreciation schedule completed - I can just make my own judgement.

Does this depreciation work the same as building depreciation in that it decreases the cost base of the property by the amount that you depreciate each year?

Does anyone know anywhere that has clear guidelines on this? In my research I came across the ATO's guide for rental properties in 2013, but even this was not really all that clear.  

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Best bet is to get a depreciation schedule done, they'll give you an exact figure then. If you talk to a decent one, they'll tell you if it's not worth it before paying them.

Different items have different rates - eg over 2 years, 5 years, 10 years etc depending on what the item is. You're not expected to know what every piece has.  

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My suggestion would be a depreciation specialist who can give a cost v's benefits guarantee. BMT Depreciation do...Other's too I'm sure. That way they will give you the confidence of making the right choice and cost will be based on benefits.

You are correct with the pre-1986 issue. Has the kitchen or any other improvs since ??? ie a deck, fencing etc ? Improvements after '86 may improve that position. Then there are P&E items etc...A three year old oven , carpets etc and it could be worthwhile.  

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To answer your question - depreciation on plant & equipment included in the original purchase is indeed effectively added back to the cost base.

The cost base is the original cost of the property less the value of depreciable plant & equipment (plus a few other adjustments). The sale price is also reduced by the then market value of the depreciable plant and equipment which is often taken as the written down value.  

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[email protected] said: ↑
My suggestion would be a depreciation specialist who can give a cost v's benefits guarantee. BMT Depreciation do...Other's too I'm sure. That way they will give you the confidence of making the right choice and cost will be based on benefits.

You are correct with the pre-1986 issue. Has the kitchen or any other improvs since ??? ie a deck, fencing etc ? Improvements after '86 may improve that position. Then there are P&E items etc...A three year old oven , carpets etc and it could be worthwhile.Click to expand...
Sorry for the late reply - been caught up and never got back around to this. Still haven't done the depreciation report, although it is something I want to suss out asap as I have just had an offer accepted on my second IP and I want to work out the best way to deal with depreciation.

Where exactly does one find a depreciation specialist?

To answer your question, I don't think really anything has been improved in that time, although to be perfectly honest, I'm not sure.

I have done some reading on what constitutes P&E and indeed it looks like it could be worthwhile. But I have no idea how to go about doing it and how much subjectivity there is in the depreciation I choose to report (and whether it is worth actually getting a proper report done - costs would start eating into the benefits).

GaryT said: ↑
To answer your question - depreciation on plant & equipment included in the original purchase is indeed effectively added back to the cost base.

The cost base is the original cost of the property less the value of depreciable plant & equipment (plus a few other adjustments). The sale price is also reduced by the then market value of the depreciable plant and equipment which is often taken as the written down value.Click to expand...
Cheers, that's how I thought it worked.

So effectively, you can claim the tax deduction in the year, but you will pay additional CG when you sell the property. Although, due to the time value of money and the 50% CG discount, it is obviously preferably to claim the tax deduction in the year.

Does make it somewhat more cumbersome to keep record of, but I've already got detailed records set up so it should be ok.

This is something I want to get a very clear grasp on as I build up my portfolio so I can amend my records accordingly and use the most favourable legal tax treatment.  

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Just email me some photos and I'll tell you how much depreciation might be there and you decide what you want to do. We do this all the time.
Scott  
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