Claiming Depreciation on a Pre87 Built Investment Home
An older house. There is still some depreciation to be claimed on it.
There is a common myth that depreciation is not able to be claimed on pre-87 built investment homes; that is where construction commenced on a home prior to the 15/09/87. This could not be further from the truth.
In a nutshell, depreciation is an income tax deduction on a rental property for natural wear and tear. If you own your own home (that is you're not renting it out to another person/s), and that same home is in the name of a trust or a company; you will be able to claim depreciation on your home - irrespective of its age/when construction first commenced. If your home is in your own and/or another individuals name, you cannot claim depreciation on it unless you are renting it out. For the latter, you can do so if you're renting out at least one room to another person, and/or you have your home office situated at home. For the latter two circumstances, please seek appropriate accounting and financial advice on whether or not claiming depreciation is suitable for you.
Lets renovate for more depreciation, higher rents and capital growth. Yes.
Older homes are generally renovated to keep up with the times, and to replace old assets. You hear of many renovated terrace houses out there. Regardless as to whether or not these homes have been renovated; depreciation is able to be claimed on such old homes, except if you have owned and/or rented out a property for four years or longer without any structural renovations completed on such a property since the 15/09/87.
When I refer to structural renovations
, I am referring to improvements in a rental home such as new kitchens, bathrooms and extensions to name. All building related. Replacing assets such as the blinds and the carpet are not structural renovations. The latter additions are still awesome improvements to an older investment home. Why? Such assets can still be claimed on depreciation, and they depreciate faster than the rate of 2.5% from when such improvements started after the 15/09/87 over a 40-year period.
A glimpse of depreciation on an old pre87 investment home, on a Depreciator Tax Depreciation Schedule.
In order to claim depreciation on a pre-87 investment home, it is important to engage in the services of a fully qualified Quantity Surveyor, of who is also a registered tax agent. Such a Quantity Surveyor also needs to be a member of the Australian Institute of Quantity Surveyors (AIQS), in order to ensure that your Tax Depreciation Schedule is ATO Compliant.
Personally, I've found the services of nationwide provider Depreciator
to be fantastic. I personally own a 1960's two-bedroom apartment in Sydney that I rent out. The previous owners had painted the walls and polished the floor boards. At the time, I did not renovate this property.
Old bathroom tiles. No depreciation left. About to be renovated on a pre87 home though.
To save costs, Depreciator requested me to complete a simple and straightforward asset checklist, and to then provide them with photos of the assets in the house indicated on this list. From this simple 30-minute exercise, I was able to claim $2,000 plus in Depreciation on this house off my tax bill in the first full financial year of renting out this house. This is extra, unexpected cash flow from the investment home. Depreciator's schedules go for 20 years, and they will (in 99% of cases) amend your schedule free of charge should you need your schedule amended as a result of further renovations being completed on such an investment home.
Properties that have had more extensive renovations will attract even greater depreciation. This is an incredible tax break that the majority of investment home owners are not aware they can claim as another source of income from their rental home. Yes, even for an older
An older renovated home. Great depreciation there.
241982 - 2023-07-18 05:32:29