Hi,
We're looking at buying a positive cash-flow property (read Margarat Lomas books) and have found a 45yr old home in good area for $110 with $155 p/wk rent (currently tenanted) which gives approx $10 shortfall per week. It's nicely renovated – paint, carpet, kitchen benches, bathroom and aluminium windows, new hotwater, resurfaced tile roof.
Our question – the rent doesn't quite cover interest. But would the renovations be deductible (such an old home, how do you prove age of renovations?)
Thanks for your help.
Kathrenovations would be deductible via deprectiation, best to get a depreciation report done
Thanks. Is this done before or after purchase? Is there any way to get a ball-park figure to work with?
Employ a quantity surveyor and they will work it out for you.
If you work it out yourself it is quite involved.
The date the renovations were done would be needed and the costs involved.
Then you need to find out the effective life spans of each item in the renovation.You can use diminishing depreciation but the calculation is more complex as you need to diminish the value while it was being used for private use.
Or
Normal depreciation over effective life. So if private life was 2 years and 60 days and the effective life was say 6 years then
2 +60/365 is private use and 6 – (2 + 60/365) is investment use.So in the last year you can only claim 305/365 of the depreciation.
The depreciation is original cost / effective life for each year or portion of the effective lifeAppointing a quantity surveyor is a good idea. It will save your time. You know that ” Time is money”. I would like to say thanks to duckster. Your comments are really so useful and informative buddy.
Thanks for this most helpful info.
Regards,
Kath
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