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Older properties and depreciation

By Alanna Ngo

Do you think your property is too old to worry about a depreciation report?

Many investors remain unsure about whether it is worthwhile obtaining a depreciation schedule for a rental investment property that was built before 1987.

Current tax legislation states that any property built before 15th of September 1987 (residential) and 20 July 1982 (non-residential) cannot claim the capital works allowance as a deduction. This often results in the investor not thinking to obtain a depreciation report as they believe that their property is too old. However it is worth enquiring about any property – even one that is 100 years old!

In the case of older properties, it is worth noting that a capital allowance and tax depreciation report covers not only the capital works allowance but depreciation of plant and equipment as well. This means that all properties that obtain an income by the way of rent should be eligible to claim a deduction for the plant and equipment items contained within the property.

Even if a property is too old to claim the capital works allowance for the building structure, the investor will still be eligible to claim the plant and equipment allowance.

Additionally, if extensions or renovations were completed after 1982 (non-residential) or 1987 (residential), they will attract the capital works allowance.

What types of plant and equipment items can be claimed?

Many plant and equipment items contained within a property are able to be depreciated over their effective lives.

Some of these items include:

  • hot water service
  • ceiling fans
  • dishwasher
  • carpet
  • blinds
  • exhaust fans
  • washing machines
  • cooktops
  • ovens
  • floating timber floors
  • rangehood
  • smoke alarms
  • air conditioner
  • light
  • shades
  • microwaves
  • vinyl
  • furniture
  • package
  • clothes
  • dryer
  • freestanding spa
  • curtains
  • security systems

If you’re unsure about your property’s depreciation potential contact us (BMT Tax Depreication) and we can provide a depreciation estimate. Additionally, if we inspect a property and believe that it’s not worth completing a depreciation schedule, we will not charge you for our services.

Sourced: www.bmtqs.com.au

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