How important is calculating future building depreciation when considering a development for holding for positive cash flow and capital gains?
Is it a legitimate ingredient or an extra bonus?Thanks.
Skyeboy
Hi Skyboy,
I’m one for claiming all the depreciation I can.
This helps the cash flow but when you sell the amount of depreciation claimed on the property over the years is deducted from the original purchase costs to give your base cost for CGT calculations.
I think its better to take the deductions when you can (now) as the rules could change at any time.
hrm
Factoring in depreciation makes sense, but even I still like properties to stack up without tax deductions.
And it’s only depreciation claimed on the building itself that has an impact on CGT calculations i.e. fixtures and fittings don’t come into it. And in many cases, that’s where there is more depreciation in the first 4 years or so.
ScottTax Depreciation Schedules
Australia wide service
1300 660033
[email protected]
http://www.depreciator.com.auThanks for your replies depreciator and hmackay.
So who works out the original building and fixtures and fittings costs? Does a builder give you a breakdown of costs or is this a job for a professional depreciator?
Thanks.
skyeboy
With a new building, the actual building costs should be available from the builder – unless he has disappeared. The ATO prefer actual costs to be used, as oppsed to estimates.
If efforts are made to obtain the actual building costs and there is no luck, an estimate can be made. The most qualified person to do this would be a QS. Estimators are also okay, as are some builders.
The values of fixtures and fittings don’t require particular expertise to estimate.
ScottTax Depreciation Schedules
Australia wide service
1300 660033
[email protected]
http://www.depreciator.com.auThanks Scott.
skyeboy
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