I currently have a new investment property which will be leased soon. Once I have my depreciation schedule completed, will I be able to claim the full amount of depreciation for the year, or will I have to apportion the amount of depreciation for the number of months the property has been leased for?
ie. if depreciation is 2500 for the first year and the property is leased for 2 months, will my claim for 05/06 year be 2/12 times 2500 = 416 or the full 2500?thanks
Hi Cadan,
Aussie Tax Law requires that there be a nexus (connection) between the earning of assessable income and the incuring of an expense.
Please confirm this with your accountant, but you may be able to start claiming depreciation from the date the property became available for rent, as opposed to the first day it was rented.
Certainly, the ATO seems to concede that a business can start claiming expenses once it is set up, which may be when an ABN is issued or when a bank account is created.
As you would expect, you won’t be able to claim depreciation prior to owning the property, during the settlement period, or while any renos were being done that meant the property could not be rented.
I would expect that this timing principle can be extended to all property related expenses (inc. interest).
Again though, pls confirm with a tax accountant.
All the best,
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
thanks Steve, will confirm with my accountant.
thanks Steve, will confirm with my accountant.
thanks Steve, will confirm with my accountant.
Cadan,
With the building, you need to pro rata the claim for the days in the year when the property was available to rent.
The Assets (fixtures and fittings) are ascribed a value on the first available to let date.
Scott
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